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ASSESSING MARKET POTENTIAL OF NFC FOR MOBILE PAYMENTS IN 2012: FROM SWIPING TO WAVING

September 2011

INTRODUCTION
NEAR FIELD COMMUNICATIONS (NFC) MOBILE PHONES AS THE DIGITAL WALLET

CRITICAL SUCCESS FACTORS


MARKETS READY FOR NFC MOBILE PAYMENT 2012

INTRODUCTION

Scope
Disclaimer Much of the information in this briefing is of a statistical nature and, while every attempt has been made to ensure accuracy and reliability, Euromonitor International cannot be held responsible for omissions or errors. Figures in tables and analyses are calculated from unrounded data and may not sum. Analyses found in the briefings may not totally reflect the companies opinions, reader discretion is advised.

Consumer Electronics
Smartphones

Consumer Finance
Card Payment Transactions (excl Commercial)

Consumer Foodservice
Chained Fast Food Transactions

Countries and Consumers


Consumer Expenditure on Transport Service (excl Air Travel)

Retailing
Store-Based Retailing (Outlets)

NFC Mobile Payment Adoption

The report studies the market potential of Near Field Communications (NFC) for mobile payments in 2012. Euromonitor Intl projects that high transaction volume and low priced purchases offers the greatest opportunities for NFC mobile payment success, riding on increasing mobile phone ownership and consumers acceptance of alternative payment modes. This study reviews critical industries that offers these characteristics and identifies countries that are ready for NFC mobile payment adoption.

Euromonitor International

CONSUMER ELECTRONICS: ASSESSING THE MARKET POTENTIAL OF NFC

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INTRODUCTION

Objectives
The core objective of this report is to review the potential for the mobile phone to become the new digital wallet through the adoption of Near Field Communications (NFC) in 2012. NFC is a secure, short-range radio technology, which enables communication between a reader and a NFC tag when placed close to one another. This in turns, allows for simplified and time-efficient transactions, data exchange and connections. The following industries have been selected as case studies due to their inherent characteristics that befits NFC usage: Consumer Electronics Consumer Finance Consumer Foodservice Countries and Consumers Retailing For NFC mobile payments to potentially succeed, Euromonitor International projects that high transaction volume, low value purchases inherent in the above industries offers the highest potential for mass NFC mobile payment adoption. Other success factors includes the widening ownership of mobile phones, the presence of built-up Infrastructure such as the number of retail outlets and consumer behavior towards the usage of card payments vs alterative payment modes. In addition, this report examines all the critical success variables and identifies countries with the highest potential for NFC mobile payment adoption in 2012.

Euromonitor International

CONSUMER ELECTRONICS: ASSESSING THE MARKET POTENTIAL OF NFC

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INTRODUCTION

Key findings
Government-backed initiatives key to success A top-down push from the government, especially for public transport systems, holds the key to the potential success of NFC mobile payments.

Company-backed initiatives Consumers are generally not keen to have different versions of mobile limited in impact payments for different products/services/companies, as they typically encounter inter-operability difficulties and are confusing in application. High volume, low value transactions Consumers eager for mobile payment Implementation not costly High volume, low value transactions such as those apparent in fast food services and public transportation offer the highest potential for mobile payments. Interestingly, consumers in developing markets are more receptive to and eager to adopt mobile payments than consumers from developed markets, due to a lack of existing payment options. Cost of implementation lies largely in the installation of payment terminals for retailers, since consumers can convert their existing mobile phones to be NFC-enabled at a minimal additional cost. The lack of an industry-wide standard will be a major growth obstacle if consumers are unable to enjoy a seamless usage experience. Consumers are skeptical of alternative payment options and are concerned with theft and fraud. Putting into place security safety measures and frequent consumer education programmes will be critical to the success of mobile payments.
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Lack of common standard Security concerns must be addressed

Euromonitor International

CONSUMER ELECTRONICS: ASSESSING THE MARKET POTENTIAL OF NFC

INTRODUCTION
NEAR FIELD COMMUNICATIONS (NFC) MOBILE PHONES AS THE DIGITAL WALLET

CRITICAL SUCCESS FACTORS


MARKETS READY FOR NFC MOBILE PAYMENT 2012

NEAR FIELD COMMUNICATIONS (NFC)

NFC and the Ecosystem


NFC technology can be used for a wide variety of applications, especially in high volume and low value transactions. This includes the use of NFC; Payment

Payment

For mobile payments as a replacement for credit/prepaid cards and to store credit/bank information.
Ticketing To purchase and add stored value to the tickets to access transportation gates and gain event entry.

Pairing

Ticketing

Sharing
To aid the transfer of documents and content across electronic devices. Service initiation To activate a service on another device, which allows for data transfer, to gain access to websites and discounts on smart posters, amongst others.

NFC Ecosystem

Service Initiation

Pairing Sharing To establish Bluetooth connection by bringing devices to NFC hotspots, by configuring networks automatically between a pair of Wi-Fi devices.

Euromonitor International

CONSUMER ELECTRONICS: ASSESSING THE MARKET POTENTIAL OF NFC

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NEAR FIELD COMMUNICATIONS (NFC)

NFC Mobile payment application


Globally, consumers are well acquainted with the use of cards for payments, which often offers point rewards for usage. Typically, cards are used for big ticket purchases while low priced transactions are currently paid for in cash. Hence, NFC mobile payment offers as an attractive cashless alternative. A significant advantage of NFC mobile payment over cash and card payment is the speed of transaction. Consumers just tap or wave the NFC mobile gadget and payments will be transferred instantly. For mass adoption, high transactional volume will be crucial to make up for the low priced purchases. Train station and retail points, as detailed in the below chart, are just two examples that showcases the high potential usage of NFC mobile payment due to the high volume, low priced transactions for train commuters and shoppers respectively.

Train Station

Vehicle

Office

Retail

Gantry entry

Driver licence

Enter/exit office
Exchange business cards

Payment
Loyalty points Discount coupons

Payment

Payment

Computer login

Euromonitor International

CONSUMER ELECTRONICS: ASSESSING THE MARKET POTENTIAL OF NFC

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NEAR FIELD COMMUNICATIONS (NFC)

Case studies: Actual implementation still low

NFC trials have been undergoing in many countries for some time now, by both governments and private sectors. However, actual country-wide implementation has been limited, due to low consumer acceptance, cost of nationwide implementation and technology sophistication limitations.

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NEAR FIELD COMMUNICATIONS (NFC)

Case studies: NFC trials and implementations


Australia - Retailing Australian bank ANZ completed a mobile wallet service trial in April 2011. This system requires consumers to use an iPhone case that contains an NFC-enabled microSD (secure digital) card. As reported, 90% of the participants in the trial found that the technology either met or exceeded their expectations and needs. However, ANZ Bank preferred the NFC functionality to be embedded in the mobile phones rather than the external case that had to be used during the trial. UK - Retailing Mobile operator Orange and Barclays Bank jointly launched NFC mobile payment services in May 2011. Presently, it only works with the 2G Samsung S5230. Payments are limited to purchase below 15 while the service is available at more than 50,000 stores. Participating merchants include high transacting food operators such as McDonalds and Subway.

China - Transportation
China Unicom launched a commercial NFC service in Beijing, following extensive field testing in the Chinese capital and in the cities of Shanghai, Guangzhou and Chongqing. Commuters can use their mobile phones to make payments on public transport services and at more than 2,000 other businesses. Users can continue using their current mobile phones, with just the need of upgrading to a new subscriber identification module (SIM) card with the NFC module integrated.

Germany - Transportation
Transport operators and authorities are cooperating to create a national ticketing system, by combining Touch&Travel and HandyTicket. Touch&Travel is a mobile ticketing scheme initiated in 2008 and which has expanded to a Touch&Travel iPhone app in January 2011. There are plans to implement the NFC software into the Android operating system, which will accelerate NFC penetration on mobile phones. HandyTicket works similar to Touch&Travel.
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NEAR FIELD COMMUNICATIONS (NFC)

Case studies: NFC trials and implementations


US - Retailing Google Wallet and Google Offers was launched in May 2011, with more than 300,000 merchants country-wide such as Macys and Dairy Queen providing tap-and-pay terminals. This system also allows consumers to store all their credit card details and to receive information of their current location, such as F&B promotions. Google Wallet expects up to one-third of the retail stores in the country to provide NFC mobile payment services in the next one year of launch. France - Retailing Think&Go NFC system allows consumers to enjoy interactive shopping. Mobile services include instant access to product information, personalised marketing advice and couponing. Shoppers will also be alerted to products, according to purchasing habits, needs and allergies. Retailers, such as Carrefour and Casino, can collect shoppers information and analyse detailed consumer activity to develop retailing strategies.

Finland - Social Networking/Foodservice


Finnish start-up company, 6Starz, unveiled a new social networking service, based on NFC and Quick Response code, with the latter allowing for convenience-oriented applications. Customers can check in and make friend connections by touching two NFC phones together as well as make mobile coupon claims. Pilot testing of 6Starz service continues to run, with results expected in the last quarter of 2011.

Belgium - Music/Networking
Fans of music band Faithless tested the NFC system, which allows them to exchange contacts and interact with one another via Facebook. Held during the PIAS Nites festival in March 2011, fans were given NFC tagged cards and they could post on Facebook pictures taken in NFC-enabled photobooths. This system also offers the fans access to games, contests and digital media.
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NEAR FIELD COMMUNICATIONS (NFC)

The waiting game: Manufacturers, retailers and consumers


Based on the earlier review of NFC trials and implementations, three key elements that must exist for NFC mobile payment to take off are: NFC enabled smartphones Mobile phone manufacturers are generally reluctant to implement NFC functionality as it increases handset costs and consumers lament of a lack of a good range of NFC enabled smartphones. As a vicious cycle, the limited consumer usage is also a key factor in not offering NFC functionality. Retailers providing NFC mobile payment terminals Retailers typically cited a lack of consumer demand for not readily providing NFC terminals. NFC payment option also competes with the inhouse store cards offered by established retailers such as Isetan, which gives the latter access to shopper details and purchasing habits. Consumers confidence in NFC mobile payment Consumers ready acceptance of a new payment mode, with concerns of security well addressed.

NFC enabled smartphones

Consumer usage

Retailers acceptance

Section summary Currently, NFC mobile payment is caught in a situation where all parties consumers, retailers and manufacturers are waiting for each other to bolster the technology adoption and application. Despite this stalemate, the general consensus is when, rather than if, NFC payment will take off. The following slides underpins the importance of mobile phones and identify critical success factors that address the concerns and actions of manufacturers, retailers and consumers in 2012.

Euromonitor International

CONSUMER ELECTRONICS: ASSESSING THE MARKET POTENTIAL OF NFC

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INTRODUCTION
NEAR FIELD COMMUNICATIONS (NFC) MOBILE PHONES AS THE DIGITAL WALLET

CRITICAL SUCCESS FACTORS


MARKETS READY FOR NFC MOBILE PAYMENT 2012

MOBILE PHONES AS THE DIGITAL WALLET

Key consumer statistics


Having identified the key parameters that must exist for NFC mobile payments to successful take off, we now explore how and why mobile phones can become the new digital wallet. This implies that consumers can leave their homes with basically nothing but just their mobile phones in hand. A quick review of the compelling statistics in Euromonitors various researched industries, captured on the right, paints a rosy picture for the growth and penetration of NFC mobile payments. Specifically in the following slide, we will be exploring how mobile phones are evolving to be the one most critical consumer electronics item of ownership and where penetration of mobile phone subscriptions in less developed pockets are robustly gaining momentum, if not, already on par with developed markets.

75%
of the worlds population will possess mobile phone subscriptions in 2012

28%
the worlds population will have a credit card in 2012

Over the 5 year period of 2011-2015, smartphones will become the top product choice for new purchases (as opposed to feature phones) and increase its percentage contribution significantly as a total of mobile phone sales globally.

1,502
million new mobile phones sales in 2012

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MOBILE PHONES AS THE DIGITAL WALLET

Mobile phones an integral part of consumer lifestyles


Mobile Phone Subscriptions (Per capita) 2010/2015 2010 Eastern Europe Western Europe Australasia Latin America North America Asia Pacific Middle East and Africa 1.4 1.2 1.1 1.0 1.0 0.6 0.6 Global Retail Volume 2012 2015 1.5 1.3 1.2 1.0 1.0 0.7 0.7
0 2011 2012 Smartphones 2013 2014 Feature Phones 2015 450,000 900,000 1,350,000 1,800,000

Global Retail Volume 2011-2015


(000)

Smartphones Feature Phones

Key Point: Globally, mobile phones have emerged as the most important electronic product of ownership, with mobile phone subscriptions in developing markets such as Brazil being on a par with, if not higher, than developed Western Europe. Especially in developing markets, the first time a consumer accesses the internet could be via a mobile phone rather than a computer.

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MOBILE PHONES AS THE DIGITAL WALLET

Mobile payment gaining acceptance in developing markets


Beyond mobile phone ownership, an online poll by Accenture shows that consumers in developing markets such as India and China are more receptive to mobile payments than consumers in developed markets, such as in Europe and the US. China India Brazil

Yes No

South Korea

Japan

US and Europe

Source: Accenture online poll of consumers indicating if they favour using mobile phones for most payments

Euromonitor International

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MOBILE PHONES AS THE DIGITAL WALLET

Serving the unbanked population via mobile payments


Further, a key factor why consumers in developing markets are more receptive to mobile payments is that a large proportion of its population have no current access to banking facilities as compared to consumers in developed markets. Thus, for the unbanked population, any alternative payment mode other than cash is welcomed. Given that developing markets possess a high mobile phone penetration that continues to expand, this is a positive platform for mobile payments to commence and succeed. On the other hand, consumers in developed markets have a wide range of payment options, including credit cards, debit cards, charge cards, and store cards. Mobile payments will join as just one of the many options available and would be leveraged upon for very selected purchasing points. More critically, mobile phone loss/theft, card fraud and consumers credit information being hacked, as in the case of Citibank and Sonys PlayStation Network, have made consumers in developed markets wary of varying payment modes. Banked Population 2010
India

China

Brazil

US

UK

France

South Korea

Japan

Germany 0% 25% Banked 50% 75% Unbanked 100%

Euromonitor International

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INTRODUCTION
NEAR FIELD COMMUNICATIONS (NFC) MOBILE PHONES AS THE DIGITAL WALLET

CRITICAL SUCCESS FACTORS


MARKETS READY FOR NFC MOBILE PAYMENT 2012

CRITICAL SUCCESS FACTORS

Critical success factors


The opportunity for wide-spread NFC mobile payment adoption lies in its offer of convenience and time efficiencies in payment transfer. For many individuals, mobile phone is the most important item to have on hand when out of home. Accordingly, the growth vision for NFC mobile payment is for individuals to just bring their NFC embedded mobile phones when out, negating the need to bring along ones wallet or to wait in slow moving queues. In this and the subsequent slides, Euromonitor International identifies industries like fast food and public transport that can capitalize on the convenience factor of NFC mobile payment by converting cash payments for high volume, low value transactions into mere waves. Importantly, factors like the availability of smartphones, number of retail outlets and cash payment transactions will be thoroughly discussed while identifying potential countries ready for NFC mobile payment adoption. In addition, accompanying analysis will draw attention to the trends and developments on selected countries for each industry, with an emphasis on developing markets, rather than advanced markets like the US and UK.

NFC enabled smartphones Smartphones sales

Retailers acceptance of NFC payment Number of retail outlets Card payment transactions

Consumers using NFC payment Chained fast food transactions Expenditure on land transport

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CRITICAL SUCCESS FACTORS

Smartphones ownership 2012


Top 15 Markets Rank 1 2 3 4 5 6 7 8 9 10 11 Country China US UK France Brazil South Korea Germany India Italy Spain Canada The availability of smartphones will spur the adoption of NFC mobile payments and Euromonitor Internationals projection of the top 15 markets for smartphone sales in 2012 draws to attention the strong presence of developing countries in this list. A critical catalyst for the penetration of smartphones in China stems from the Chinese government's effort to consolidate mobile network operators (MNOs), which sees them investing in 3G infrastructure and improving coverage, rather than price-cutting each other. AT&Ts acquisition of its rival T-Mobile will trigger a 4G price war with Verizon and Sprint, propelling smartphone sales in the US.

Brazil and Mexicos strong smartphones sales is due to the countries' reviving economic growth and improving income levels, smartphone deals targeted at low-income consumers and growing mobile internet.
Indias strong local mobile phone manufacturers such as Micromax and Spice and having the worlds lowest call rates are incentives to launch smartphones to increase hardware sales and data revenue. Russias Yota is the sole 4G network provider and MNOs will work with Yota to avoid costly duplication of infrastructure investment. Consumers will benefit from faster 4G service access and lower data prices. Saudi Arabias position is driven by its affluent citizens and a large number of foreign workers working in the gulf nation while a third of the Filipino population is below 14 years and rapidly acquiring smartphones.
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12
13 14 15

Russia
Saudi Arabia Philippines Mexico

Euromonitor International

CRITICAL SUCCESS FACTORS

Smartphones ownership 2012

(000 units) >80,000 10,000-80,000 5,000-9,000

Euromonitor International

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CRITICAL SUCCESS FACTORS

Consumer expenditure on land transport 2012


Top 15 Markets Rank Country 1 2 3 4 5 6 7 8 9 10 11 China France Brazil Mexico Japan US Germany Land transport expenses, in both developed and developing countries, will continue to account for a good portion of ones dispensable income and offers good prospect for NFC mobile payment adoption Rail continues to be the preferred transport mode within and between EU countries such as France and Germany, with high speed trains hugely popular amongst both tourists and business travellers. An established and extensive land transport network in Japan and South Korea means that land travel remains a comfortable and efficient option. Top of the list, Chinas high spend growth and ranking is due to the governments focus on rail and road development to reduce economic hours lost due to traffic congestion and to allow for fast and affordable means of travel between Chinese cities. While domestic air travel in Brazil is gaining popularity due to poor road conditions and safety issues, spend remains highest on land transport. On the other hand, Mexico will have the highest land spend growth as commuters are switching back to trains and buses due to rising airfares. Other developing countries that make up the top 15 list such as India has a huge low-income population who extensively use its governmentowned transport network, despite poor road/rail quality. While not a common feature in top lists, the Algerian governments commitment of a US$9.6b budget to develop its land transport network to stimulate economic growth will push the country into the top 15.

India
UK Russia Italy Algeria South Korea Netherlands Spain

12
13 14 15

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CRITICAL SUCCESS FACTORS

Consumer expenditure on land transport 2012

(US$ million, fixed ex-rate) >50,000 20,000-49,000 10,000-19,000

Euromonitor International

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CRITICAL SUCCESS FACTORS

Card payment transactions 2012


Top 15 Markets Rank Country 1 2 3 4 5 6 7 8 9 10 11 US Brazil South Korea China France UK Canada Japan Hong Kong, China Turkey Russia The prevalence and usage of cards in payments will compete with NFC mobile payments, especially with the offer of loyalty programs and reward points. The top 15 list tracks card usage trends and popularity. Post economic recession, US consumers have shifted to a buy now, pay now mentality over the buy now, pay later mentality and favour debit cards. This is also to avoid hefty interest and late credit charges. On the other hand, in the UK, charge cards are still preferred to credit cards but increased usage in personal cards may be attributed to purchases by small companies and self-employed entrepreneurs. The Dutch have abolished extra charges on small transactions, driving debit card usage over cash payments. In addition, cash withdrawals and retail transactions on cards are free of charge within the Eurozone. Lower-income earners in Brazil are fuelling card payment growth, aided by rising wages and government social programmes despite the risk of lowerincome families defaulting on payments. In Turkey, credit card usage remains very strong as card users enjoy huge discounts up to 20%, free instalments and valet services etc. Credit card ownership remains relatively low in China, with the market dominated by the Governments China Union Pay, a debit card system. The increased costs of ATM cash withdrawal and discounts offered by retailers are driving card transactions in Argentina. The government is also looking have the unbanked population to have accounts and debit cards.
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12
13 14 15

Netherlands
Australia Argentina Taiwan

Euromonitor International

CRITICAL SUCCESS FACTORS

Card payment transactions 2012

(US$ million, fixed ex-rate) >1,500,000 500,000-1,500,000 120,000-490,000

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CRITICAL SUCCESS FACTORS

Chained fast food transactions 2012


Top 15 Markets Rank Country 1 2 3 4 5 6 7 8 9 10 11 US The consumer foodservice industry offers numerous opportunities for NFC mobile payments, given that a large proportion of meals are currently paid for in cash. This is especially so for the fast food channel. Famed as the fast food nation, the US will retain top spot in the number of transactions despite evolving consumers attitudes towards large chained fast food, fuelled by less than favourable media reports. The presence of chained operators eases the resistance to NFC adoption. Fast food will continue to shine in Japan, on the back of offering very affordable bento meals and home delivery services to busy, pocketconscious Japanese amidst a very bleak economic environment.

Japan
China Canada South Korea Taiwan UK Germany Thailand Australia Mexico France Brazil

In Taiwan and China, fast food sales via convenience stores such as 711 will continue to rake in high volumes due to outlet density and extensive ready-to-eat product ranges.
In Thailand and the Philippines, burger chains are targeting families and youths while expanding aggressively and renovating current outlets. Increasingly, fast food joints are being leveraged upon as hangout joints. Fast food popularity in Mexico and Brazil is expected to increase in tandem with economic recovery and rise in working population. A distinct shift in individual portions orders, rather than family meals. Convenience stores fast food image in France is evolving to that of bistros. Here, consumers read newspapers, purchase flowers or chat while consuming fast food meals.
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12
13 14 15

Philippines
Spain

Euromonitor International

CRITICAL SUCCESS FACTORS

Chained fast food transactions 2012

(000 transactions) >20,000,000 1,000,000-20,000,000 450,000-900,000

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CRITICAL SUCCESS FACTORS

Store-based retailing 2012


Top 15 Markets Rank Country 1 2 3 4 5 6 7 8 9 10 11 India China Indonesia Egypt Brazil Mexico Iran The absolute number of retail points defines the universe for NFC mobile payment opportunities. Given their tremendous physical spread, developing markets feature strongly in this top 15 list. In Indonesia and India, shopping malls are rapidly increasing, driven by a growing urban population who enjoy congregate in shopping malls as meeting points and to shop /dine in air-conditioned comfort. Egyptians aged under 24 years account for 55% of the domestic population. Being more westernised and liberal as compared to the older generation, these consumers view shopping /dining as a form of socialisation and entertainment.

US
Thailand Philippines Japan Italy Turkey Pakistan Spain

In Brazil, heightened retailing competition has resulted in mergers and acquisitions, with more retailing outfits being set up in the Northeast.
While the retailing scene in Philippines will see expanded number of shopping malls nationally, Thailand continues to grow as non-store retailers such as Avon increase their visibility in store-based retail channels, unaffected by its unstable political climate. The retail scene in Pakistan remains highly fragmented, with large retail stores found largely in the major cities such as Lahore and fuelling growth, even as the risk of inflation escalation remains high. Grocery retailers Coop and CONAD continued to fight for retail leadership while foreign retailers are moving into the Italian market, opening more outlets.
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13 14 15

Euromonitor International

CRITICAL SUCCESS FACTORS

Store-based retailing 2012

(000 outlets) >5,000 1,000-5,000 500-900

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INTRODUCTION
NEAR FIELD COMMUNICATIONS (NFC) MOBILE PHONES AS THE DIGITAL WALLET

CRITICAL SUCCESS FACTORS


MARKETS READY FOR NFC MOBILE PAYMENT 2012

MARKETS READY FOR NFC MOBILE PAYMENT 2012

Identifying potential NFC mobile payment markets


The accompanying table pits the top 15 markets across the different success factors identified by Euromonitor International as crucial to NFC mobile payment success and identifies countries that possess three or more of the five variables. A higher score rating indicates higher success potential. The results clearly draw light to developing markets as possessing strong potential for NFC mobile payment adoption, rather than the conventional belief that modern systems benefits largely from presence in developed markets such as US and Western Europe. Country Brazil China Spain US France Japan Mexico South Korea UK Canada Germany India Italy Philippines
Euromonitor International

Smartphones

Card payment transactions

Chained fast food

Expenditure on land transport

Store-based retailing
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MARKETS READY FOR NFC MOBILE PAYMENT 2012

Potential markets for NFC mobile payments 2012

High potential market Good market Ready market


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MARKETS READY FOR NFC MOBILE PAYMENT 2012

From swiping to waving: Challenges ahead


Low start-up cost With the proliferation of smartphones and SIM card with NFC tag embedded, existing mobile phones can be used for NFC mobile payments.
WINNERS LOSERS

The transaction cost of NFC payment is lower than credit cards, which will encourage retailers to set up NFC payment option. With local governments pushing for NFC as alternative payment option and its implementation on public transport, the sheer volume of transactions will trigger uptake by other merchants.

Economies of scale

Inter-operability

The unique selling point of NFC mobile payments is to enable a seamless user experience for consumers. The absence of industrywide conformity to a common standard in terms of technical infrastructure for NFC presents an obstacle for mass adoption. Consumers are concerned about security as electronic fraud becomes increasingly prevalent. Consumer education programs are critical in allaying these fears. Small retailers are not keen on electronic payments as the transaction costs are seen as additional costs when compared to cash..

Consumers concern and retailer distrust

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MARKETS READY FOR NFC MOBILE PAYMENT 2012

Summing up
Euromonitor Internationals final country ranking list of NFC mobile payment ready markets offers a dynamic mix of both developed markets such as the US, Germany, Japan, Spain and the UK, alongside developing ones such as Brazil, China, India and Mexico. Developed markets offer ready and established public transportation systems, strong financial institutions and necessary technical expertise for successful, end-to-end implementation. The presence of chained operators with presence across numerous countries also eases the adoption process as they are constantly on the lookout for means to increase/expedite transacting volumes and grow revenues. Developing markets, on the other hand, offer large population numbers who are keen to try out new technologies, aside from cash payments. The low penetration of card payments with minimum income qualification works to the advantage for NFC mobile payment adoption, by reducing the number of payment mode options. NFC enabled mobile phones offers usage beyond payments, including that of access to discount coupons, user identification (eg. driver licence), access transport ticketing and more enabling their device to act as a wallet replacement. NFC functionality can also replace existing store loyalty cards and help retailers identify its customers purchasing behaviors. While obstacles such as technology advancements, cost of implementation, consumer acceptance and retailer attitude have significant impact on the successful rollout of mobile payments, these identified countries possess the underlying fundamentals for successful implementation of nationwide mobile payment sooner rather than later. While the demand and market potential for NFC mobile payments is clearly strong, the onus is to convert feasibility studies into actual, cost effective implementation.

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MARKETS READY FOR NFC MOBILE PAYMENT 2012

Data parameters and report definitions


2010 figures are provisional and based on part-year estimates. Volume data are given in 000 units, unless otherwise stated. Historic value data are given in US$ year-on-year exchange rates, unless otherwise stated. The forecast period under review subsumes the years 2010 through to 2015, inclusive. Forecast value data are given in constant US$ terms using fixed 2010 exchange rates, unless otherwise stated. Definitions for industry-specific and other terminology/abbreviations used in this report: Consumer Electronics Smartphones Any device capable of voice communication over a cellular network. A smartphone must have an identifiable operating system, allows installation of software applications (apps) and screen size of less than 5 Consumer Finance Card Payment Transactions (excl Commercial) Includes debit, credit, charge, store and prepaid transactions) Consumer Foodservice Fast Food Fast food outlets are typically distinguished by the following characteristics: a standardised and restricted menu; food for immediate consumption; tight individual portion control on all ingredients and on the finished product; individual packaging of each item; a young and unskilled labour force; counter service

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MARKETS READY FOR NFC MOBILE PAYMENT 2012

Data parameters and report definitions (2)


Retailing Store-Based Retailing Store-based retailing is the aggregation of grocery retailers and non-grocery retailers. Sales of new and used goods to the general public for personal or household consumption from retail outlets or market stalls Countries and Consumers Consumer Expenditure on Transport Expenditure on purchase of cars, motorcycles and other vehicles, operation of personal transport equipment and transport services

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