Near Field Communication (NFC) and its leading application - that of contactless payments - offer financial institutions a way to move small transactions out of the cash economy and into profitable credit-based systems, but there are still consumer concerns over privacy, according to a report by ABI Research.
     For consumers who hate to wait, NFC payments offer faster and easier check-outs by simply waving a mobile phone near a point-of-sale reader. But, according to the ''Near Field Communication Semiconductors'' report, the development of the market for the chipsets that underpin the technology has been slow. 116.30.192.184 This article is copyright 2007 UsingRFID.com.

Primary growth barrier
     The main reason for this slow growth, according to ABI Research senior analyst Douglas McEuen, is security: "The financial institutions and industry standards-setting bodies around the world can''t yet agree on the appropriate levels and methods of data protection."

     The main NFC IC vendors - companies such as Infineon, NXP, and Inside Contactless - are locked in three-way conversation, McEuen argues: "Of course they have to deal in the first instance with the OEMs who make the handsets. But they also have to take into account, at an early stage of design, the security concerns of the financial institutions and the revenue concerns of the mobile operators. Operators in the GSM world would like to see the security mechanisms included in the SIM card to better support their ability to monetize payment application management while financial institutions have pushed for it to be included in the NFC chipset itself."

Price counts too
     Currently, NFC chipsets run to more than US$2, the report notes. If the price continues to decrease toward US$1 range, and in combination with the existing NFC market opportunities provided by contactless payment growth, adoption is very likely to accelerate rapidly.

     But ABI Research''s forecasts do not predict that happening before 2012, due in part to lengthy trial periods attributed to differing viewpoints on the placement of the secure element. Once all these conditions are met, however, technical progress is likely to be rapid.

     McEuen concluded: "The technologies are well-understood and the product development roadmap is very similar to that of Bluetooth, which will make the leaps to next-generation products faster, cheaper and easier." The study provides a detailed examination of the NFC chipset and modem, examining both short- and long-term market implications and providing key vendor profiles and market forecasts through to 2012.

 

 

 

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