Apple and Samsung Tech, Along With Host Card Emulation, Drive NFC Usage

In another indication of the rebound of near-field communication for payments, some 148 million consumers globally will use the contactless technology in a mobile or wearable device to buy something this year, according to the latest report from Juniper Research, released Monday.

Fully 70% of these consumers will be wielding a smart phone from Apple Inc. or Samsung Electronics Co. Ltd., the U.K. research firm predicts.

Indeed, Apple’s Apple Pay mobile-payments service, launched first in the U.S. in the fall of 2014, and the Samsung Pay wallet, introduced seven months ago, have led a revival in the fortunes of so-called contactless payments. Using NFC’s short-range radio capability, a payment can be done with a wave or tap of an equipped device at a point-of-sale terminal. Lately, payments networks and consumer-products companies have begun experimenting with NFC chips embedded in watches, fitness bands, and articles of clothing in an effort to turn wearables into payments devices.

All told, payments via handsets or wearables will total $95 billion worldwide by 2018, more than doubling the $35 billion accounted for by these devices in 2015, according to Juniper’s report, “Contactless Payments: NFC Handsets, Wearables & Payment Cards 2016-2020.”

Nearly all of this volume, however, will come from smart phones, which are widely available to consumers, by contrast with wearable devices. Wearables of all kinds will control 2% or less of the volume, Juniper predicts, despite Apple’s having shipped almost 9 million copies of its Watch by the end of last year. Launched a year ago, the Watch enables Apple Pay transactions.

A report Juniper issued last month found that wearables payments will account for just 0.1% of all digital payments—including in-app and other non-POS transactions—by 2020.

Also helping to drive the NFC trend, besides the introduction of wallets from Apple and Samsung, is the spread of host card emulation technology. HCE allows banks and other issuers to create NFC wallets without a chip, called the secure element, controlled by the device manufacturers or mobile network operators. Instead, payment credentials are managed in a cloud configuration controlled by the issuer.

Some 55 financial institutions worldwide are now offering HCE-based wallets commercially, according to Juniper, up from seven at the end of 2014. Twenty of these are in China, with another 23 in Europe.