NFC Mobile Payments Market Update

Overview

·         Forecasts Revised and Updated
·         Apple Decision Impact Assessed  
·         NFC Retail Business Models Evaluated

This update to the 2nd edition of Juniper’s report into the NFC Retail Market & Mobile Payments industry comes in the wake of Apple’s decision not to include an NFC chipset in the iPhone 5 - a move which has in turn prompted many players across the value chain to reappraise the short and medium term potential of the technology.

Taking into consideration this and other key developments over the past six months this market update includes revised forecasts for NFC retail payments, ticketing and coupons, together with an exhaustive analysis of the likely impact those developments will have upon vendor, retailer and consumer activity.

Market forecasts Based on a combination of primary research interviews with leading industry participants and secondary research, Juniper provides regional forecasts of: –NFC handset adoption –NFC retail transaction volumes and values –Operator retail payment management revenues –NFC coupon and ticketing volumes.

Readers can also benefit from the accompanying Excel dataset. This provides regional data including 46 tables and nearly 3000 data points.  It also provides additional granularity splitting NFC handset adoption by 36 countries (including China, Germany, UK, US and Korea).

What this report covers

·          Key regional NFC forecasts
·          Vendor Matrix and Vendor profiles assessing selected vendors
·          Expert analysis and interviews with leading players
·          Strategic recommendations

Containing key regional NFC Forecasts, the report examines the roles played by network operators, financial institutions, OTT providers and retailers, and through a series of case studies explores the opportunities for each of these players.   The vendor matrix offers an assessment of selected active vendors summarising player capability and is accompanied by vendor profiles concluding with Juniper’s views of the key strengths and opportunities for each vendor.

Table of Contents

Executive Summary

ES1 Introduction    9
Figure ES1: The Mobile Device in the Retail Customer Journey    9
ES2 Trends, Drivers & Constraints    10
Figure ES2: NFC Payment Trends, Drivers & Constraints    10
ES3 Forecast Methodology    11
Figure ES3: NFC Retail Payments Market Forecast Methodology    11
ES4 NFC Native Handsets & Interim Solutions    12
Figure ES4: Global Comparison: NFC Handsets vs. Interim Solutions (m) 2012-2017    12
Table ES1 Global Comparison: NFC Handsets vs. Interim Solutions (m) 2012-2017    13
ES5 The NFC Retail Payments Market    13
Figure ES5: Total Value of NFC Retail Payments Transactions ($m)  Split by 8 Key Regions 2012-2017    13
Table ES2: Total Value of NFC Retail Payments Transactions ($m)  Split by 8 Key Regions 2012-2017    14
Figure ES6: NFC Transaction Forecast Comparisons, May 2012 vs December 2012: North America & Western Europe    14
Table ES3: NFC Transaction Forecast Comparisons, May 2012 vs December 2012 ($m): North America & Western Europe    15
ES6 Recommendations    15

1. NFC Retail Payments Definition, Context & Segmentation

1.1 Introduction    17
1.2 NFC’s Pivotal Role in Retail    17
Figure 1.1: The Mobile Device in the Retail Customer Journey    18
1.3 Mobile Commerce    18
Figure 1.2: Mobile Commerce Market Segmentation    18
1.3.1 Mobile Payments    19
i. Mobile Money Transfer    19
ii. Point of Sale (POS) Payment    19
1.3.2 Mobile Retail Marketing    20
i. Mobile Advertising    20
ii. Mobile Coupons & Vouchers and Mobile Loyalty    20
1.3.3 The Holy Grail of Mobile Retail Marketing & Payments    20
1.4 NFC Market Players    21
Figure 1.3: The NFC Retail Payments Ecosystem    21
i. Mobile Network Operators (MNO)    21
ii. Financial Institutions    22
iii. Handset manufacturers (OEMs)    22
iv. Technology providers    22
v. Merchants    22
vi. Consumers    22

2 NFC Trends, Drivers & Constraints

2.1 Introduction    23
2.2 Overview    24
Figure 2.1: NFC Payment Trends, Drivers & Constraints    24
2.3 Trends    25
Figure 2.2: NFC Mobile Ticketing Market Synergies    27
2.4 Drivers    27
i. Case Study: Google Wallet    28
ii. Google Wallet: Verifone NFC POS    28
iii. Google Wallet: CorFire NFC TSM    29
2.4.2 Positive Trial & Commercial Service Feedback    29
Table 2.1: NFC Launches by Country 2011-2012    29
2.4.3 MNO Investment    30
2.4.4 NFC Support Initiatives    30
Figure 2.3: Ericsson Networked Society City Index    31
i. Case Study: Singapore IDA    31
2.4.5 Emerging Market Interest    32
2.5 Constraints    32

3 The NFC Ecosystem & Business Models

3.1 Introduction    37
3.2 The NFC Ecosystem    37
Figure 3.1: The NFC Payments Ecosystem    38
3.2.1 Acquirer    38
3.2.2 Payment Network Provider    38
3.2.4 Wallet Developer    39
3.2.5 OS Provider    39
3.2.6 Value Added Service Provider    39
3.3 The NFC Business Model    39
3.3.1 The “Keys” Issue    39
3.3.2 Consortia Status    40
i. “Single Player” Consortia    40
ii. Two Party Consortia    40
iii. MNO-led Consortia    40
iv. “Integrated” Consortia    41
Figure 3.2: Cityzi Branding    41
v. Conclusion    41
3.3.3 MNOs    42
i. MNOs and the SIM SE    42
ii. MNO Advantages    42
iii. MNO Initiatives    42
a. MNO Example: ISIS    42
Figure 3.4: ISIS Mobile Wallet Screenshot & Retailer Logo    43
b. MNO Example: Project Oscar    43
v. Conclusion    43
3.3.4 Financial Institutions    44
i. Financial Institution Constraints    44
ii. Financial Institution Imperatives    44
iii. Financial Institution and the microSD SE    44
Figure 3.5: GOTrust microSD NFC SE    45
iv. Visa Europe Interview    45
v. Conclusion    46
3.3.5 OTT & OEMs    46
i. Background    46
ii. OTT    47
iii. OEMs    47
iv. Conclusion    48
3.3.6 Retailers    48
i. Background    48
ii. The Retailer Value Proposition    49
Figure 3.7: The Retailer NFC Proposition    49
iii. Potential Retailer Influencers    49
iv. Retailer-led Initiatives    50

4 NFC-Enabled Handset Forecast

4.1 Introduction    51
4.2 Methodology    52
Figure 4.1: NFC Retail Payments Market Forecast Methodology    52
4.3 Mobile Handset Forecast    54
Figure 4.2: Mobile Handset Base (m) Split by 8 Key Regions 2012 – 2017    54
Table 4.1: Mobile Handset Base (m) Split by 8 Key Regions 2012–2017    54
4.4 NFC Smartphones Forecast    55
Table 4.2: NFC Smartphones (% of Total Handsets) Split by 8 Key Regions 2012-2017    56
Figure 4.4: NFC Smartphones (m) Split by 8 Key Regions 2012-2017    56
Table 4.3: NFC Smartphones (m) Split by 8 Key Regions 2012-2017    57
4.5 NFC Featurephones & Low Cost Handsets Forecast    57
Figure 4.5: NFC Featurephones & Low Cost Handsets (m) Split by 8 Key Regions 2012-2017    57
Table 4.4: NFC Featurephones & Low Cost Handsets (m) Split by 8 Key Regions 2012-2017    58
4.6 Total Native NFC Handsets    58
Figure 4.6: Total NFC Handsets (m) Split by 8 Key Regions 2012-2017    58
Table 4.5: Total NFC Handsets (m) Split by 8 Key Regions 2012-2017    59
Figure 4.7: Total NFC Handsets (%) Split by 8 Key Regions 2012-2017    59
Table 4.6: NFC Handsets (%) Split by 8 Key Regions 2012-2017    60
4.7 Interim NFC Solutions Forecast    60
Figure 4.8: Total Number of Mobile Handsets (m) With Interim NFC Capability  Split by 8 Key Regions 2012-2017    61
Table 4.7: Total Number of Mobile Handsets (m) With Interim NFC Capability  Split by 8 Key Regions 2012-2017    61
4.8 NFC Native Handsets & Interim Solutions    62
Figure 4.9: Global Comparison: NFC Handsets vs. Interim Solutions (m) 2012-2017    62
Table 4.8 Global Comparison: NFC Handsets vs. Interim Solutions (m) 2012-2017    62

5 NFC Retail Payments Forecast

5.1 NFC-Enabled Payment Users    63
5.1.1 Native NFC Handsets in Use for Payments    63
Figure 5.1: Percentage of Native NFC Handsets in Use Split by 8 Key Regions 2012-2017    63
Table 5.1: Percentage of Native NFC Handsets in Use Split by 8 Key Regions 2012-2017    65
Figure 5.2: Native NFC Handsets in Use for Payments (m) Split by 8 Key Regions 2012-2017    65
Table 5.2: Native NFC Handsets in Use for Payments (m) Split by 8 Key Regions 2012-2017    66
Figure 5.3: Native NFC Handsets in Use as % of All Mobile Handsets  Split by 8 Key Regions 2012-2017    66
Table 5.3: Native NFC Handsets in Use as % of All Mobile Handsets Split by 8 Key Regions 2012-2017    67
5.1.2 All NFC-Enabled Handsets in Use for Payments    67
Figure 5.4: NFC Handsets & Interim Solutions in Use for Payments (m)  Split by 8 Key Regions 2012-2017    67
Table 5.4: NFC Handsets & Interim Solutions in Use for Payments (m) Split by 8 Key Regions 2012-2017    68
5.1.3 Native NFC Handsets in Use for Payments by SE Controller    68
i. MNO-Controlled Payment Users    69
ii. FI-Controlled Payment Users    69
iii. OTT-Controlled Payment User    69
Figure 5.5: Native NFC Handsets in Use for Payments (m) by SE Controller 2012-2017    69
Table 5.5: Native NFC Handsets in Use for Payments (m) by SE Controller 2012-2017    70
5.2 NFC Retail Payment Transactions    70
5.2.1 Average Number of NFC Retail Payments Transactions    70
Figure 5.6: Average Number of NFC Retail Payments Transactions per User p.a.  Split by 8 Key Regions 2012-2017    71
Table 5.6: Average Number of NFC Retail Payments Transactions per User p.a.  Split by 8 Key Regions 2012-2017    71
5.2.2 Total Number of NFC Retail Payments Transactions    72
Figure 5.7: Total Number of NFC Retail Payments Transactions (m) p.a.  Split by 8 Key Regions 2012-2017    72
Table 5.7: Total Number of NFC Retail Payments Transactions (m) p.a.  Split by 8 Key Regions 2012-2017    72
5.3 NFC Retail Payments Transaction Value    73
5.3.1 Average NFC Retail Payment Transaction Value    73
Figure 5.8: Average Value of NFC Retail Payments Transactions ($)  Split by 8 Key Regions 2012-2017    73
Table 5.8: Average Value of NFC Retail Payments Transactions ($)  Split by 8 Key Regions 2012-2017    74
5.3.2 Total NFC Retail Payments Transaction Value    74
Figure 5.9: Total Value of NFC Retail Payments Transactions ($m)  Split by 8 Key Regions 2012-2017    74
Table 5.9: Total Value of NFC Retail Payments Transactions ($m)  Split by 8 Key Regions 2012-2017    75
Figure 5.10: NFC Transaction Forecast Comparisons, May 2012 vs December 2012:  North America & Western Europe    75
Table 5.10: NFC Transaction Forecast Comparisons, May 2012 vs December 2012 ($m): North America & Western Europe    76
5.4 MNO NFC Retail Payment Management Revenues    76
5.4.1 Total MNO NFC Retail Payment Management Revenues    76
i. Initial Provisioning Fees    76
ii. Annual SE Rental Fees    76
iii. Customer Care Fees    76
Figure 5.11: Total MNO NFC Retail Payment Management Revenues ($m) Split by 8 Key Regions 2012-2017    77
Table 5.11: Total MNO NFC Retail Payment Management Revenues ($m)  Split by 8 Key Regions 2012-2017    78
5.4.2 MNO Incremental NFC Retail Payment ARPU Opportunity    78
Figure 5.11: MNO NFC Retail Payment Incremental ARPU Opportunity ($) Split by 8 Key Regions 2012-2017    78
Source: Juniper Research    78
Table 5.11: MNO NFC Retail Payment Incremental ARPU Opportunity ($)  Split by 8 Key Regions 2012-2017    79

6 NFC Metro Ticketing Forecast

6.1 Introduction    81
6.2 Metro Ticketing    82
6.3 NFC Metro Ticketing Forecasts    83
6.3.1 Methodology    83
Figure 6.1: NFC Ticketing Methodology    83
6.3.2 NFC Metro Ticketing Users    84
Figure 6.2: Mobile Phone Users (%) Who Use NFC Metro/Bus Mobile Ticketing  Split by 8 Key Regions 2012-2017    84
Table 6.1: Mobile Phone Users (%) Who Use NFC Metro/Bus Mobile Ticketing Split by 8 Key Regions 2012-2017    85
6.3.3 NFC Metro Ticketing Transactions    85
Figure 6.3: Average Number of NFC Metro Ticketing Transactions per User p.a.  Split by 8 Key Regions 2012-2017    85
Table 6.2: Average Number of NFC Metro Ticketing Transactions per User p.a.  Split by 8 Key Regions 2012-2017    86
Figure 6.4: Total Number of NFC Metro Ticketing Transactions (m) p.a.  Split by 8 Key Regions 2012-2017    86
Table 6.3: Total Number of NFC Metro Ticketing Transactions (m) p.a.  Split by 8 Key Regions 2012-2017    87
6.3.4 NFC Metro Ticketing Transaction Value    87
Figure 6.5: Average Value of NFC Metro Ticket Transactions ($)  Split by 8 Key Regions 2012-2017    87
Table 6.4: Average Value of NFC Metro Ticket Transactions ($)  Split by 8 Key Regions 2012-2017    88
Figure 6.6: Total Value of NFC Metro Ticketing Transactions ($m)  Split by 8 Key Regions 2012-2017    88
Table 6.5: Total Value of NFC Metro Ticketing Transactions ($m)  Split by 8 Key Regions 2012-2017

7 NFC Coupons Forecast

7.1 Introduction    91
Figure 7.1: Mobile Coupon Delivery Options    91
7.2 NFC Coupons    92
7.2.1 Proximity Marketing    93
7.3 NFC Coupons Forecasts    94
7.3.1 Methodology    94
7.3.2 Mobile Coupons Users By Mobile Marketing Channel    95
7.3.3 NFC Mobile Coupons Issued    96
Figure 7.5: Number of NFC Coupons Issued Per Annum (m)  Split by 8 Key Regions 2012-2017    96
7.3.4 Mobile Coupons Issued By Mobile Marketing Channel    97

8 Vendor Analysis & Matrix

8.1 Vendor Landscape    99
Figure 8.1: NFC Mobile Commerce Vendor Types    99
8.2 Vendor Analysis    100
8.2.1 Vendor Assessment Criteria    100
Table 8.1: Vendor Capability Assessment Factors    100
8.2.2 Limitations and Interpretation    101
8.3 Vendor Positioning Matrix Results    101
8.3.1 Overall Matrix Position    101
Figure 8.2: Global NFC Mobile Commerce Positioning Matrix    102
8.3.2 Vendor Groupings    102
i. Summary    102
ii. On Track Vendors    102
iii. Vendors Exceeding Expectations    103
iv. Vendors with Further Potential    103
8.4 Vendor Profiles    104
8.4.1 CorFire    104
8.4.2 Gemalto    105
Ericsson IPX    109
Figure 8.3: Ericsson TSM leveraging IPX Managed Service    110
8.4.3 Giesecke & Devrient    110
8.4.4 Nokia    113
8.4.5 NXP    115
8.4.6 Oberthur Technologies    117
8.4.7 Proxama    119
8.4.8 VeriFone    121

9 NFC Technology, Infrastructure & Industry Groups

9.1 NFC    125
9.2 The NFC Retail Payments Technology Solution    126
9.2.1 NFC Technology    126
Figure 9.1: NFC Retail Payments Logical Architecture    126
i. NFC Controller    127
ii. Secure Element    127
iii. Application Environment    127
iv. User Interface    127
v. Wide Area Modem    127
vi. Contactless Payment (POS) Terminal    127
9.2.2 The Secure Element    127
Figure 9.2: Handset Physical Architecture including Secure Element Options    128
i. SIM SE    128
ii. Embedded SE    128
iii. MicroSD removable SE    128
9.2.3 The Trusted Service Manager (TSM)    128
Figure 9.3: Simple NFC Payment Provisioning Architecture    129
Figure 9.4: The Role of the Trusted Service Manager    129
Figure 9.5: The Operation of the Trusted Service Manager    129
9.2.4 Interim NFC Technology Solutions    130
Figure 9.6: Integration Phase Comparison – NFC and Mobile Broadband    130
i. Stickers    131
Figure 9.7: Twinlinx My-Max NFC Sticker    131
ii. MicroSD Cards    131
Figure 9.8: Giesecke & Devrient NFC SD Card    131
iii. NFC Case or Sleeve for Smartphones    132
Figure 9.9: NFC Case for iPhone    132
9.3 NFC Industry & Trade Groups    133
9.3.1 GSMA    133
i. GSMA Mission    133
Figure 9.10: GSMA NFC SIM Concept    133
ii. GSMA Interview    133
iii. GSMA Activity    134
9.3.2 NFC Forum    135
Figure 9.11: Uses of NFC    136
Figure 9.12: N-Mark Logo    136
9.3.3 SIMalliance    137
i. Organisation & Membership    137
ii. SIMalliance Interview    137
Figure 9.13 Worldwide SIM Shipments 2010 vs 2009    138
9.3.4 GlobalPlatform for NFC    138
Figure 9.14: SIM Security Domains    138
Figure 9.15: GlobalPlatform SE Specification Programme    139
9.3.5 Mobile Marketing Association    139
i. MMA Focus    139
ii. MMA Interview    139

Companies Referenced

Case studies and Companies profiled: Corfire, Ericsson, Gemalto, Giesecke & Devrient, Google Wallet, MoreMagic, Nokia, NXP, Oberthur Technologies, Proxama, Singapore IDA, VeriFone

Companies interviewed: CorFire, Eagle Eye Solutions, Ericsson, Giesecke & Devrient, GSMA, Mobile Marketing Association, MoreMagic, NXP, SIMalliance, VeriFone, Visa Europe

Companies Discussed: 2ergo, Aeroexpress, AIS (Advanced Info Services), Amazon, Ambiq, América Móvil, American Eagle Outfitters, American Express, Apple, AT&T, AVEA, Axiata Group Berhad, AXIS, Barclaycard, Bharti, Blackberry, Bloomingdale's, Bouygues Telecom, Capital One, Chase, China Telecom, China Unicom, China Union Pay, Citi, Cityzi, CorFire, Crédit Agricole, CSL, Deutsche Telekom, Dubai Roads & Transport Authority, Eagle Eye, eBay, Elisa Corporation, Emirates Integrated Telecommunications Company,  PJSC (du), Ericsson, Etisalat, European Payments Council, Everything Everywhere, EZ Link, Facebook, FINNAIR, First Data, Gameloft, Garanti Bank, Gemalto, Georgia Credit Union, Giesecke & Devrient, Global Platform for NFC, Globe Telecom, Google, GOTrust Technology Inc, HTC, InComm, INSIDE Secure, KASIKORNBANK, KPN, KT Corporation, La Caixa, LG, LINK Mobility, Macy's, MasterCard, Maxis, MINICK, Mobily, MoreMagic, Moscow Metro, mSolutions, MTN Uganda, MTS, MTV, New York Metropolitan Transit Authority, NFC Forum, Nokia, NXP, Oberthur, Orange, PayPal, Playphone, Proxama, Proximus, Qtel Group, RadioShack, Renfe, Rogers Communications, Samsung, Saudi Telecom Company (STC), Second Life, SFR, SIMalliance, SK C&C, SK Telecom, Smart, Softbank Mobile, Sprint, Starbucks, Starhub, Subway, Sulake, Target, Telecom Italia, Telecom New Zealand, Telecom Slovenije, Telefonica, Telekom Austria Group, Telenor, TeliaSonera, Telus, TMN, T-Mobile USA, Toys"R"Us, Turkcell, Twitter, Vagverket, Valassis, Verifone, Verizon, VimpelCom, VIVA Bahrain, Vodafone, Walgreens, Wal-Mart, Yoigo

Extra Info

‡ 8 key regions includes:

North America, Latin America, Western Europe, Central & Eastern Europe, Far East & China, Indian Subcontinent, Rest of Asia Pacific and Africa & Middle East.