Growing smart phone penetration in the world is expected to revolutionize the mobile payments industry across the globe. Currently, mobile payments are being dominated by USSD/QR code technology. Though, in last couple of years, near field communication (NFC) has emerged as a strong alternative proximity technology for mobile payments. This has driven the major players across the industries to develop mobile payments solutions around the same. NFC is growing substantially in terms of NFC enabled infrastructure around the world and the number of mobile based solution running on same. Even after strong growth of infrastructure, NFC adoption among end consumers has remained subdued. Last year saw entry of another competing technology, called Bluetooth low energy (BLE) in mobile payments. Apple Inc. has been at forefront of this technology’s adoption. Analysts across the globe are contrasting two technologies to determine winner, as the question of winner is critical in charting the growth of mobile payments across the globe.
"Beacon technology is expected to revolutionize the customer’s retail experience. It has potential to integrate all steps of consumer’s retail experience from product selection to payments to rewards" - Anonymous Study Participant (Retailer).
NFC is quintessentially a proximity communication technology based on radio waves with a range of 0.2 meters. BLE is technology build upon Bluetooth with low power consumptions, cost and high range (~100 meters). Because of its higher reach, BLE provides a user greater transaction ease as the transaction can be done from distance (without standing in queue). Though, this longer range makes it susceptible to hacking/spying attacks. Power consumption for both technologies is similar. NFC POS terminals are costly and their high cost has been the primary reason for low adoption among merchants. BLE attachment with current POS can provide a cost effective solution for merchants. Though, a BLE integrated POS may be as costly as NFC. BLE with beacons provide superior in store marketing and location based services opportunity for retailer vis-à-vis NFC. With its superior consumer mapping at store, BLE provides rich marketing insights to retailer vis-à-vis NFC which is focused only on the payments as of now. However, NFC has better interoperability with existing infrastructure for contactless payments especially at the transit facilities. BLE technology has application spanning multiple industry verticals.
With increasing perceived benefits, retailers in US have initiated to gravitate towards BLE as against NFC.
- NFC phone shipment forecast: NFC enabled phone shipments are expected to grow at 37% CAGR from XX million sets in 2013 to XX million sets in 2018.This is driven by strong growth in smart phone sales in APAC. APAC is expected to remain the largest market with more than X% of NFC enabled shipments in 2018. For APAC, penetration of NFC enabled phone in overall smart phone market is expected to increase from X% in 2013 to X% in 2018. EMEA is expected to remain the second largest market with X% shipment share in 2018, followed by Americas with X% share.
- NFC POS installed base forecast (Prior to BLE impact): NFC POS installed base is expected to grow from XX million in 2013 to XX million by 2018, growing at CAGR of X%.Growth is expected to be driven by increased adoption in EMEA with, share of NFC enabled POS installed base as a % of total POS installed base, is expected to grow from X% in 2013 to X% in 2018. APAC already has significant NFC POS installed base in China and Japan. Japan has largest number of NFC enabled POS (>1 Million) in the world. As a result, growth is expected to be marginally lower than EMEA. NFC enabled POS installed base is expected to grow at X% in Americas and is expected to be close to XX million units in 2018.
- BLE technology adoption forecast: BLE as technology is in its inception phase and is thus expected to grow exponentially from a low base (<X million) to XX million BLE enhanced POS by 2018. US is expected to be the major growth driver, with BLE enhanced installed POS to grow from a lowly XX% in 2013 to XX% by 2018. This is expected to be driven by both the top 100 retailers in first couple of years followed by strong growth in small and marginal retailers. EMEA is expected to pick up the BLE adoption with a lag of x-y years and APAC with lag of x-y years.
- NFC POS installed base forecast (Considering BLE impact): With perceived benefits of BLE, NFC installed POS number are expected to grow at a rate lower (X% as against Y%) than the earlier forecast. Impact of BLE on NFC is expected to be the most profound in Americas, with NFC POS terminal installed base growth at X% compared to Y% earlier. However, impact on other regions is expected to be marginal as the BLE implementation would start in 2014/15 and would need at least another 5 years to make a strong impact. This is augmented by the fact that NFC already has strong head start in EMEA and APAC.
- NFC phone shipment forecast (Post Apple Impact): NFC enabled phone shipments are expected to grow at X% CAGR from XX million sets in 2013 to XX million sets in 2018 with adoption of NFC by Apple. Americas will have large impact with its share of global shipment to be at X% than X% as per previous estimates.
- NFC POS installed base forecast (Post Apple Impact): NFC POS installed base is expected to grow from XX million in 2013 to XX million by 2018, growing at CAGR of X%. Growth is expected to be driven by increased adoption in EMEA and Americas (Driven by growth in US because of Apple factor).
BLE would act as competing technology to NFC and would result in lower growth of NFC adoption. This is in line with popular perception of BLE and NFC being viewed as competing technologies in the mobile payments industry. Though, there is opportunity to integrate NFC and BLE in one solution to create a superior customer in-store experience.
Retailers are expected to be driver of BLE adoption as it presents a cost effective solution to integrate and enhance the consumer in-store experience for them. On the other hand, NFC with HCE implementation would be viewed as more of payments enabler and would continue to grow strongly from its already good numbers. BLE provides an opportunity to semiconductor companies to diversify their business across payments enabling chipsets. With an extensive range of BLE applications across verticals, new firms are expected to emerge which would use BLE technologies to create new solutions. Existing solution providers of mobile payments should look at BLE as an opportunity to create an Omni-channel experience for end consumers.
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Companies covered in the report (sample)
|Apple Inc||PayPal||American Eagle Outfitter|
|Giant Eagles||Universal Music||Gilbarco Veeder Root|
|Macy’s||CES||Rueben House Museum|
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Table of Contents
1.0 Executive summary
3.0 NFC shipment and adoption forecasts (2013-18E)
4.0 BLE technology adoption forecasts (2013-18E)
5.0 Impact of BLE on NFC shipments and adoption
6.0 Impact of Apple including NFC in iPhone 6 on NFC shipments
7.0 Key takeaways
8.0 About us
9.0 Companies covered in the report
Table of Exhibits
Exhibit 1:BLE applications
Exhibit 2: Technical comparison of BLE and NFC
Exhibit 3: Business solution comparison of BLE and NFC
Exhibit 4: NFC smart phone shipment forecasts (‘000s units)
Exhibit 5: NFC POS installed base split by regions(2013) – 6.2 Million
Exhibit 6: NFC POS installed base forecasts (Million units, 2013-18E)
Exhibit 7: POS installed base with BLE attachment forecasts (Million units, 2013-18E)
Exhibit 8: Impact of BLE on NFC adoption
Exhibit 9: NFC POS installed base forecasts (Million units, 2013-18E, Post BLE impact)
Exhibit 10: Apple patents relating to NFC
Exhibit 11: NFC smart phone shipment forecasts ('000s unit, Post Apple Impact)
Exhibit 12: NFC POS installed base forecasts (Million units, 2013-18E, Post Apple Impact)
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