Before the iPhone 5 launched there was plenty of ‘will they, won’t they’ speculation about whether Apple would include NFC in the device. In the event Apple didn’t add the wireless transfer tech which can be used to power mobile payments — and that decision to eschew NFC has set the NFC market back by two years in the U.S. and Western Europe, says analyst Juniper Research.
NFC has been an area where Apple’s rivals have been able to crow they are ahead of Cupertino in adding the tech to their handsets — with mobile makers including HTC, Nokia and Samsung all jumping aboard. Even RIM has fired out some NFC-enabled BlackBerrys. But Apple is conspicuous by its absence from the NFC love-in. Speaking to AllThingsD back in September, Apple’s Phil Schiller said the company sees Passbook as a better alternative — arguing that this iOS 6 feature, which allows users to store tickets and loyalty cards on their device, does what most customers want and works with retailers’ existing payment infrastructure — without requiring them to invest in new point-of-sale devices.
As a consequence of Apple’s iPhone 5 NFC snub, Juniper has significantly scaled back its growth estimates for North American and Western Europe. The analyst argues that Apple’s decision has reduced retailer and brand confidence in the technology — which in turn has led to fewer NFC point of sale rollouts and campaigns, meaning fewer consumers are likely to encounter the technology. There is a risk of a cycle of “NFC indifference” in the short term, it says.
In its new research report, Juniper analyst Dr. Windsor Holden writes: “While many vendors have introduced NFC-enabled smartphones, Apple’s decision is a significant blow for the technology, particularly given its previous successes in educating the wider public about new mobile services.”
Juniper’s report predicts that while the proportion of NFC-enabled smartphones will be “only marginally below previous estimates” by 2017, global NFC retail transaction values are expected to reach $110 billion in 2017 — significantly below the $180 billion the analyst had previously forecast.
“Without [Apple's] support, it will be even more difficult to persuade consumers – and retailers – to embrace what amounts to a wholly new means of payment,” Holden adds.
The analyst talks about a “two-year lag” for NFC transaction values in North America and Western Europe compared to previous forecasts, as retailers delay point of sale investments. It also notes that lower than expected adoption of Google Wallet — “related allied to a delayed launch of the ISIS NFC project in the US” — will also have a negative effect on the size of the U.S. NFC market.
North America and Western Europe are the regions it expects to be most dramatically affected by Apple’s decision — other regions, such as South Korea and Japan, will be largely unaffected — with the analyst expecting “little or no impact” from Apple’s decision.
The analyst does not mention the rise of alternative mobile payment devices that do not rely on NFC — such as Square and its many rivals — but there are a wealth of startups in this area which could become another limiting factor for NFC. Last month Square announced it is now processing $10 billion annually in payments. The startup has also done a deal with Starbucks to drive adoption of its payment dongles.