Where Is NFC Going? New Reports Forecast Growth

nfc iphone

New reports on Near Field Communication (NFC) suggest its use will increase dramatically in the next couple of years. Products that support NFC today are still limited, but it is predicted that in the following years, the growth of NFC will enhance customer experience and customer service everywhere. The use of Near Field Communication as an alternative to paper tickets and credit cards make it the mobile commerce market’s fastest growing area. NFC has already gotten the attention of consumers, businesses, marketers, start-ups and venture capitalists, as it connects consumers interactively with businesses in various engaging ways. It is expected to bring in billions of dollars of revenue from user data, mobile-powered devices and marketing services. NFC is set to change the way people shop all over the world, in grocery stores, movie theaters, coffee shops, hotels, buses and trains.

Radio Frequency Identification (RFID) is a popular wireless technology that transfers information from a tag on an object using radio frequency electromagnetic fields. It has a multitude of applications such as automated identification and tracking. Because it does not require a direct line of sight to the reader, RFID is more flexible compared to other tagging technology such as bar codes.

Near Field Communication is a subset of RFID that improves on this technology further by allowing two-way communication. NFC allows smart phones and devices to communicate with each other by either bringing them close together, usually a few centimeters close, or by touching them together. NFC has a limited range of communication of 4 inches or 10 centimeters which is most suited for security-sensitive applications. NFC allows for data exchange and contactless transactions. It simplifies complex communications such as Wi-Fi. Aside from smart phones and mobile devices, an unpowered NFC chip, called a “tag”, can also be used to communicate with an NFC device. NFC technology can be used for access control, ticketing, mobile payment, data sharing, ads, transportation and more. The popularity of smart mobile devices has made the use of NFC more widespread.

Near Field Communication is a fairly new technology, having only been officially introduced to the market in 2010. The technology has been in development since 2004 when Sony, Nokia and Philips formed the NFC Forum. The Forum currently has a membership of 150 and certifies device compliance. In 2006, they announced the initial specifications for NFC Tags and by 2009, NFC was in its pilot testing phase. Despite NFC only being released recently, reports forecast its use will explode in the next couple of years.

According to MarketResearch.com‘s new Software and Services market report entitled “Near Field Communication (NFC) Market Global Forecast & Analysis (2011-2016) By Products”, only a few products in the market today use NFC technology, but it is expected that there will be a dramatic growth in applications that use it. Currently only 5% of all smart phones and mobile devices are NFC-enabled. It is estimated that NFC support for mobile devices will increase in the next 5 years and by 2016, 46% of smart phones will be NFC-enabled. Revenue in NFC is expected to grow at an estimated compound annual growth rate (CAGR) of 35% from $7,686 million in 2011 to $34,515 million in 2016. They predict that the most attractive segment is mobile payments, with ticketing and access control a close second. The major manufacturers for NFC chips and controllers are American companies NXP Semiconductors and Broadcom as well as the Japanese company Renesas.

The report states the market is split evenly among North America, Europe and Asia Pacific. North America and Europe both account for 60% of the market share in NFC. The Asia Pacific accounts for a quarter of the market share and is considered the fastest growing region, thanks to high-growth countries such as China, Japan and South Korea who were the first adopters of NFC technology.

In Juniper Research‘s report called “Mobile Ticketing Evolution: NFC, Forecasts & Markets 2012-2016”, 13% or 1 in 8 American and West European mobile users will use their mobile phone as a bus ticket or metro rail by 2016 using NFC technology. This is compared to less than 1% today. Commuters can tap their NFC-enabled mobile devices against a fare gate to board trains or buses. Mobile NFC transactions are estimated to be at $74 billion by 2015. Mobile ticketing is expected to quadruple in 2013 to 23 billion transactions. They estimate that in 2016 it will represent more than 50% of all mobile ticketing revenue due to its appeal for users and transport operators.

The report warns that Near Field Communication technology must be tested thoroughly first to avoid delays and problems. In mobile ticketing, speed of passenger processing is of utmost importance since any glitches in the system can cause long queues.


  • Mobile Ticketing Evolution: NFC, Forecasts & Markets 2012-2016

by Juniper Research
227 pages
released February 14, 2012

  • Near Field Communication (NFC) Market Global Forecast & Analysis (2011-2016) By Products

by Market Research
303 pages
released February 1, 2012


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