NFC Rising: The Contactless Terminal Base Expands in North America And Globally

By Peter Lucas
@DTPaymentNews

By the numbers, at least, merchants appear to be paving the way for mobile and contactless payments to become mainstream in the United States. The installed base of terminals ready for near-field communication in the U.S. and Canada is projected to reach 9.2 million by year’s end, a 92% increase over the past two years, says a report released this week by Gothenburg, Sweden-based technology research firm Berg Insight.

The rapidly growing base of NFC terminals is good news for proponents of contactless card technology, which only a few years ago was struggling to take hold with merchants in the United States. That’s no longer the case with the rollout of EMV devices, many of which include NFC capability. Also, the advent of digital wallets such as Apple Pay and Samsung Pay, which wirelessly send transaction data from a smart phone to a card terminal, is prompting merchants to provide shoppers with the technology to use their digital wallets at the point-of-sale.

“One of the main global trends in the POS terminal market is the increasing popularity of NFC technology, which enables contactless credit and debit card payments, as well as mobile payments to be accepted at the point of sale,” says Johan Fagerberg, chief executive officer and senior analyst at Berg Insight. “As a result, the installed base of NFC-ready terminals has started to grow very quickly.”

Shipments of NFC terminals in North America are expected to total 2.6 million in 2016, up from 2.2 million in 2015, the Berg Insight report says. In 2017, North American shipments are projected to reach 2.8 million.

Globally, nearly three out of every five POS terminals shipped in 2016 were NFC-ready, Berg Insight says. Meanwhile, the installed base of NFC terminals in 2016 will total 45 million worldwide, a figure Berg Insight predicts will grow to 86.9 million in 2020. In 2020, more than 77% of the world’s installed base of POS terminals will be NFC-ready, up from 46% in 2016, according to Berg Insight.

Another factor helping to fuel the growth of NFC terminals is strong demand among merchants for mobile NFC POS terminals (mPOS). In 2016, the installed base of NFC mPOS terminals in North America will total 1.8 million, Fagerberg says.

Wireless mPOS terminals enable transactions where the telecommunications infrastructure cannot support terminals that connect to phone lines. Berg Insight predicts NFC-ready mPOS terminals will total 44.9 million in 2020.

“The mPOS market today is growing even faster than the traditional POS terminal market,” the Berg Insight report says.