Google Wallet and NFC Smartphones Starting to Take Off

ABI stated that recent developments in contactless payment technology are generating renewed interest, and suggest that the long-delayed dream of comprehensive contactless payment systems may finally be approaching reality. The introduction of Google Wallet and the expectation that several new NFC-enabled smartphones will reach consumer markets soon have created a sense of optimism.

According to ABI Research, in 2010 only about 10% of total POS terminal shipments included some form of contactless technology. While the analyst firm does not agree with some of the wilder media predictions for contactless POS growth – for example that within 12 months, one third of all terminals in the US will accept contactless payments – it does forecast that 85% of terminals shipped worldwide will be contactless-enabled in 2016, driven by increased proliferation of contactless cards and especially, rapid adoption of NFC-enabled cell phones.

Senior analyst Craig Foster comments, “Contactless has the potential to change the way we pay for goods completely, significantly reducing time spent queuing at the point of sale. It also represents an almost perfect fit for the vending industry, because:

• The increased speed and simplicity of check-out go hand-in-hand with the very essence of the vending machine – to provide goods quickly and conveniently;

• The fact that small-value transactions – typically under $25 in the US – do not need to be authenticated by signature or PIN entry is very appealing to vending machine operators.”

M2M practice director Sam Lucero adds, “Contactless technology is also in the very early stages of adoption in ATMs: rather than inserting the card, a customer waves it in front of the machine and enters a PIN.”

Ingenico, VeriFone, and Hypercom are the three leading vendors of POS terminals and command most of the market. VeriFone recently completed the acquisition of Hypercom after satisfying the antitrust concerns of the US Department of Justice. Contactless terminals have formed an increasingly significant part of Ingenico’s portfolio in recent years, accounting for a claimed 21% of the company’s shipments in 2010.