Assessing Market Potential of NFC for Mobile Payments in 2012 From Swiping to Waving
-
Upload
vousfaitechier -
Category
Documents
-
view
14 -
download
0
Transcript of Assessing Market Potential of NFC for Mobile Payments in 2012 From Swiping to Waving
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
© Euromonitor International PASSPORT 3 CONSUMER ELECTRONICS: ASSESSING THE MARKET POTENTIAL OF NFC
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.
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.
Scope
INTRODUCTION
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
© Euromonitor International PASSPORT 4 CONSUMER ELECTRONICS: ASSESSING THE MARKET POTENTIAL OF NFC
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.
Objectives
INTRODUCTION
© Euromonitor International PASSPORT 5 CONSUMER ELECTRONICS: ASSESSING THE MARKET POTENTIAL OF NFC
Key findings
INTRODUCTION
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
limited in impact
Consumers are generally not keen to have different versions of mobile
payments for different products/services/companies, as they typically
encounter inter-operability difficulties and are confusing in application.
High volume, low value
transactions
High volume, low value transactions such as those apparent in fast food
services and public transportation offer the highest potential for mobile
payments.
Consumers eager for
mobile payment
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.
Implementation not costly 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.
Lack of common standard The lack of an industry-wide standard will be a major growth obstacle if
consumers are unable to enjoy a seamless usage experience.
Security concerns must be
addressed
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.
INTRODUCTION
NEAR FIELD COMMUNICATIONS (NFC)
MOBILE PHONES AS THE DIGITAL WALLET
CRITICAL SUCCESS FACTORS
MARKETS READY FOR NFC MOBILE
PAYMENT 2012
© Euromonitor International PASSPORT 7 CONSUMER ELECTRONICS: ASSESSING THE MARKET POTENTIAL OF NFC
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.
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.
Pairing
To establish Bluetooth connection by bringing
devices to ―NFC hotspots‖, by configuring networks
automatically between a pair of Wi-Fi devices.
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;
NFC and the Ecosystem
NEAR FIELD COMMUNICATIONS (NFC)
NFC Ecosystem
Payment
Ticketing
Sharing Service Initiation
Pairing
© Euromonitor International PASSPORT 8 CONSUMER ELECTRONICS: ASSESSING THE MARKET POTENTIAL OF NFC
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
Gantry entry
Payment
Vehicle
Driver licence
Payment
Office
Enter/exit office
Exchange business cards
Computer login
Retail
Payment
Loyalty points
Discount coupons
NFC Mobile payment application
NEAR FIELD COMMUNICATIONS (NFC)
PASSPORT 9
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.
Case studies: Actual implementation still low
NEAR FIELD COMMUNICATIONS (NFC)
PASSPORT 10
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.
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.
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.
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 McDonald‘s and Subway.
Australia - Retailing UK - Retailing
China - Transportation Germany - Transportation
Case studies: NFC trials and implementations
NEAR FIELD COMMUNICATIONS (NFC)
PASSPORT 11
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.
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.
Google Wallet and Google Offers was launched in
May 2011, with more than 300,000 merchants
country-wide such as Macy‘s 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.
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.
US - Retailing France - Retailing
Finland - Social Networking/Foodservice Belgium - Music/Networking
Case studies: NFC trials and implementations
NEAR FIELD COMMUNICATIONS (NFC)
© Euromonitor International PASSPORT 12 CONSUMER ELECTRONICS: ASSESSING THE MARKET POTENTIAL OF NFC
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 in-
house 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.
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.
The waiting game: Manufacturers, retailers and consumers
NEAR FIELD COMMUNICATIONS (NFC)
NFC enabled smartphones
Retailers’
acceptance
Consumer usage
INTRODUCTION
NEAR FIELD COMMUNICATIONS (NFC)
MOBILE PHONES AS THE DIGITAL WALLET
CRITICAL SUCCESS FACTORS
MARKETS READY FOR NFC MOBILE
PAYMENT 2012
© Euromonitor International PASSPORT 14 CONSUMER ELECTRONICS: ASSESSING THE MARKET POTENTIAL OF NFC
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
Euromonitor‘s 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.
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.
75% of the world‘s population will possess mobile phone subscriptions in 2012
28% the world‘s population will have a credit card in 2012
1,502 million new mobile phones sales in 2012
Key consumer statistics
MOBILE PHONES AS THE DIGITAL WALLET
© Euromonitor International PASSPORT 15 CONSUMER ELECTRONICS: ASSESSING THE MARKET POTENTIAL OF NFC
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.
Mobile phones an integral part of consumer lifestyles
MOBILE PHONES AS THE DIGITAL WALLET
Mobile Phone Subscriptions (Per capita) 2010/2015
2010 2015
Eastern Europe 1.4 1.5
Western Europe 1.2 1.3
Australasia 1.1 1.2
Latin America 1.0 1.0
North America 1.0 1.0
Asia Pacific 0.6 0.7
Middle East and Africa 0.6 0.7 0
450,000
900,000
1,350,000
1,800,000
2011 2012 2013 2014 2015
Global Retail Volume 2011-2015 (‗000)
Smartphones Feature Phones
Global Retail Volume 2012
Smartphones
Feature Phones
© Euromonitor International PASSPORT 16 CONSUMER ELECTRONICS: ASSESSING THE MARKET POTENTIAL OF NFC
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.
Mobile payment gaining acceptance in developing markets
MOBILE PHONES AS THE DIGITAL WALLET
China
Yes
No
India Brazil
US and Europe Japan South Korea
Source: Accenture online poll of consumers indicating if they favour using mobile phones for most payments
© Euromonitor International PASSPORT 17 CONSUMER ELECTRONICS: ASSESSING THE MARKET POTENTIAL OF NFC
0% 25% 50% 75% 100%
Germany
Japan
South Korea
France
UK
US
Brazil
China
India
Banked Population 2010
Banked Unbanked
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 Sony‘s PlayStation
Network, have made consumers in developed
markets wary of varying payment modes.
Serving the unbanked population via mobile payments
MOBILE PHONES AS THE DIGITAL WALLET
INTRODUCTION
NEAR FIELD COMMUNICATIONS (NFC)
MOBILE PHONES AS THE DIGITAL WALLET
CRITICAL SUCCESS FACTORS
MARKETS READY FOR NFC MOBILE
PAYMENT 2012
© Euromonitor International PASSPORT 19 CONSUMER ELECTRONICS: ASSESSING THE MARKET POTENTIAL OF NFC
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 one‘s 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.
Critical success factors
CRITICAL SUCCESS FACTORS
Consumers using NFC payment
Chained fast food transactions
Expenditure on land transport
Retailers‘ acceptance of NFC payment
Number of retail outlets
Card payment transactions
NFC enabled smartphones
Smartphones sales
© Euromonitor International PASSPORT 20 CONSUMER ELECTRONICS: ASSESSING THE MARKET POTENTIAL OF NFC
The availability of smartphones will spur the adoption of NFC mobile
payments and Euromonitor International‘s 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&T‘s acquisition of its rival T-Mobile will trigger a 4G price war with
Verizon and Sprint, propelling smartphone sales in the US.
Brazil and Mexico‘s 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.
India‘s strong local mobile phone manufacturers such as Micromax and
Spice and having the world‘s lowest call rates are incentives to launch
smartphones to increase hardware sales and data revenue.
Russia‘s 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 Arabia‘s 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.
Smartphones ownership 2012
CRITICAL SUCCESS FACTORS
Top 15 Markets
Rank Country
1 China
2 US
3 UK
4 France
5 Brazil
6 South Korea
7 Germany
8 India
9 Italy
10 Spain
11 Canada
12 Russia
13 Saudi Arabia
14 Philippines
15 Mexico
© Euromonitor International PASSPORT 21 CONSUMER ELECTRONICS: ASSESSING THE MARKET POTENTIAL OF NFC
Smartphones ownership 2012
CRITICAL SUCCESS FACTORS
(‗000 units)
>80,000
10,000-80,000
5,000-9,000
© Euromonitor International PASSPORT 22 CONSUMER ELECTRONICS: ASSESSING THE MARKET POTENTIAL OF NFC
Land transport expenses, in both developed and developing countries,
will continue to account for a good portion of one‘s 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, China‘s high spend growth and ranking is due to the
government‘s 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 government-
owned transport network, despite poor road/rail quality.
While not a common feature in top lists, the Algerian government‘s
commitment of a US$9.6b budget to develop its land transport network
to stimulate economic growth will push the country into the top 15.
Consumer expenditure on land transport 2012
CRITICAL SUCCESS FACTORS
Top 15 Markets
Rank Country
1 China
2 France
3 Brazil
4 Mexico
5 Japan
6 US
7 Germany
8 India
9 UK
10 Russia
11 Italy
12 Algeria
13 South Korea
14 Netherlands
15 Spain
© Euromonitor International PASSPORT 23 CONSUMER ELECTRONICS: ASSESSING THE MARKET POTENTIAL OF NFC
Consumer expenditure on land transport 2012
CRITICAL SUCCESS FACTORS
(US$ million, fixed ex-rate)
>50,000
20,000-49,000
10,000-19,000
© Euromonitor International PASSPORT 24 CONSUMER ELECTRONICS: ASSESSING THE MARKET POTENTIAL OF NFC
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 lower-
income 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 Government‘s 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.
Card payment transactions 2012
CRITICAL SUCCESS FACTORS
Top 15 Markets
Rank Country
1 US
2 Brazil
3 South Korea
4 China
5 France
6 UK
7 Canada
8 Japan
9 Hong Kong, China
10 Turkey
11 Russia
12 Netherlands
13 Australia
14 Argentina
15 Taiwan
© Euromonitor International PASSPORT 25 CONSUMER ELECTRONICS: ASSESSING THE MARKET POTENTIAL OF NFC
Card payment transactions 2012
CRITICAL SUCCESS FACTORS
(US$ million, fixed ex-rate)
>1,500,000
500,000-1,500,000
120,000-490,000
© Euromonitor International PASSPORT 26 CONSUMER ELECTRONICS: ASSESSING THE MARKET POTENTIAL OF NFC
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, pocket-
conscious Japanese amidst a very bleak economic environment.
In Taiwan and China, fast food sales via convenience stores such as 7-
11 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.
Chained fast food transactions 2012
CRITICAL SUCCESS FACTORS
Top 15 Markets
Rank Country
1 US
2 Japan
3 China
4 Canada
5 South Korea
6 Taiwan
7 UK
8 Germany
9 Thailand
10 Australia
11 Mexico
12 France
13 Brazil
14 Philippines
15 Spain
© Euromonitor International PASSPORT 27 CONSUMER ELECTRONICS: ASSESSING THE MARKET POTENTIAL OF NFC
Chained fast food transactions 2012
CRITICAL SUCCESS FACTORS
(‗000 transactions)
>20,000,000
1,000,000-20,000,000
450,000-900,000
© Euromonitor International PASSPORT 28 CONSUMER ELECTRONICS: ASSESSING THE MARKET POTENTIAL OF NFC
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.
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.
Store-based retailing 2012
CRITICAL SUCCESS FACTORS
Top 15 Markets
Rank Country
1 India
2 China
3 Indonesia
4 Egypt
5 Brazil
6 Mexico
7 Iran
8 US
9 Thailand
10 Philippines
11 Japan
12 Italy
13 Turkey
14 Pakistan
15 Spain
© Euromonitor International PASSPORT 29 CONSUMER ELECTRONICS: ASSESSING THE MARKET POTENTIAL OF NFC
Store-based retailing 2012
CRITICAL SUCCESS FACTORS
(‗000 outlets)
>5,000
1,000-5,000
500-900
INTRODUCTION
NEAR FIELD COMMUNICATIONS (NFC)
MOBILE PHONES AS THE DIGITAL WALLET
CRITICAL SUCCESS FACTORS
MARKETS READY FOR NFC MOBILE
PAYMENT 2012
© Euromonitor International PASSPORT 31 CONSUMER ELECTRONICS: ASSESSING THE MARKET POTENTIAL OF NFC
Identifying potential NFC mobile payment markets
MARKETS READY FOR NFC MOBILE PAYMENT 2012
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 Smartphones Card payment
transactions
Chained
fast food
Expenditure on
land transport
Store-based
retailing
Brazil
China
Spain
US
France
Japan
Mexico
South Korea
UK
Canada
Germany
India
Italy
Philippines
© Euromonitor International PASSPORT 32 CONSUMER ELECTRONICS: ASSESSING THE MARKET POTENTIAL OF NFC
Potential markets for NFC mobile payments 2012
MARKETS READY FOR NFC MOBILE PAYMENT 2012
High potential market
Good market
Ready market
© Euromonitor International PASSPORT 33 CONSUMER ELECTRONICS: ASSESSING THE MARKET POTENTIAL OF NFC
WIN
NE
RS
L
OS
ER
S
With the proliferation of smartphones and SIM card with NFC tag
embedded, existing mobile phones can be used for NFC mobile
payments.
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.
The unique selling point of NFC mobile payments is to enable a
seamless user experience for consumers. The absence of industry-
wide 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..
From swiping to waving: Challenges ahead
MARKETS READY FOR NFC MOBILE PAYMENT 2012
Low start-up cost
Economies of scale
Inter-operability
Consumers’ concern and
retailer distrust
© Euromonitor International PASSPORT 34 CONSUMER ELECTRONICS: ASSESSING THE MARKET POTENTIAL OF NFC
Euromonitor International‘s 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.
Summing up
MARKETS READY FOR NFC MOBILE PAYMENT 2012
© Euromonitor International PASSPORT 35 CONSUMER ELECTRONICS: ASSESSING THE MARKET POTENTIAL OF NFC
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
Data parameters and report definitions
MARKETS READY FOR NFC MOBILE PAYMENT 2012
© Euromonitor International PASSPORT 36 CONSUMER ELECTRONICS: ASSESSING THE MARKET POTENTIAL OF NFC
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
Data parameters and report definitions (2)
MARKETS READY FOR NFC MOBILE PAYMENT 2012
© Euromonitor International PASSPORT 37 CONSUMER ELECTRONICS: ASSESSING THE MARKET POTENTIAL OF NFC
This research from Euromonitor International is part of a global
strategic intelligence system which offers a complete picture of
the commercial environment. Also available from Euromonitor
International:
Global Briefings
Timely, relevant insight published every month on the state of the
market , emerging trends and pressing industry issues.
Interactive Statistical Database
Complete market analysis at a levels of detail beyond any other
source. Market sizes, market shares, distribution channels and
forecasts.
Strategy Briefings
Executive debate on the global trends changing the consumer markets
of the future.
Global Company Profiles
The competitive positioning and strategic direction of leading
companies including uniquely sector-specific sales and share data.
Country Market Insight Reports
The key drivers influencing the industry in each country;
comprehensive coverage of supply-side and demand trends and how
they shape the future outlook.
Learn More
To find out more about
Euromonitor International's
complete range of business
intelligence on industries,
countries and consumers please
visit www.euromonitor.com or
contact your local Euromonitor
International office:
London +44 (0)20 7251 8024
Chicago +1 312 922 1115
Singapore +65 6429 0590
Shanghai +86 21 6372 6288
Vilnius +370 5 243 1577
Dubai +971 4 372 4363
Cape Town +27 21 552 0037
Santiago +56 2 915 7200
Sydney +61 2 9275 8869
Tokyo +81 3-5403-4790
Bangalore +91 80 49040500
Experience more...