NEAR FIELD COMMUNICATION MARKET ANALYSIS

Market Size and Trends

The global near field communication market is estimated to be valued at US$ 29.01 Bn in 2024 and is expected to reach US$ 88.42 Bn by 2031, exhibiting a compound annual growth rate (CAGR) of 17.3% from 2024 to 2031.

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Near Field Communication or NFC technology has seen significant growth over the past few years driven by increased adoption in mobile payments and other contactless applications across major economies worldwide.

The market is expected to witness strong growth during the forecast period supported by wider commercial use of NFC technology. Rising digital payments and focus on safety and convenience are compelling users to adopt contactless payment options like mobile wallets. Furthermore, the integration of NFC in other IoT devices beyond payments such as access control, identification, and interaction with connected home appliances is expanding the scope of the technology. Manufacturers are also focusing on enhancing the capabilities of NFC by leveraging technologies like AI and biometrics to offer value added consumer experiences across sectors. The growth of 5G networks will further accelerate the deployment of NFC-embedded devices and fuel new use cases.

Growing use of contactless payments

The use of contactless payments through near field communication technology has been growing rapidly in many parts of the world. As consumers have become accustomed to the ease and convenience of tapping their credit or debit cards at point-of-sale terminals, they are increasingly defaulting to contactless transactions over traditional chip-and-PIN or cash payments. This change in consumer payment behavior has been driven by a few key factors.

Firstly, contactless payments simply take less time and are more convenient than inserting a card into a chip reader or handling cash. As lives get busier, customers value speed and efficiency in their daily transactions. Furthermore, the recent COVID-19 pandemic has accelerated a shift away from cash usage and towards touchless payment options due to hygiene concerns. Merchants also prefer contactless acceptance as it reduces delays in checkout lines and increases transaction throughput in their stores.

Secondly, many financial institutions have actively promoted the uptake of contactless payments by upgrading customers' cards and mobile wallets to support NFC technology as standard. Larger payment brands like Visa, Mastercard, and American Express have also raised consumer awareness about contactless through marketing campaigns highlighting the ease and security of tap and pay. The resulting increase in the number of contactless-enabled cards and devices in circulation is directly fueling the growth of contactless transactions.

Finally, more merchants across various industries from retail and F&B to transportation and event ticketing are investing in NFC-capable point-of-sale terminals to offer their customers a fast and convenient payment experience. As contactless acceptance locations continue to expand in coverage and number of transaction limit increases, it reinforces consumer preference for tap payments over other options.

This sea change in payment habits towards using contactless technologies bodes well for further growth in the near field communication market as financial institutions and merchants respond to demands for enabling contactless experiences across more channels and use cases.

Market Concentration and Competitive Landscape

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Increasing deployment of NFC in non-payment applications

While payments remain a core use case, near field communication is increasingly finding diverse applications beyond simply buying goods and services. NFC functionality integrated into smartphones and other connected devices allows for seamless interactions and data transfers between devices with just a tap. Beyond payments, popular domains where NFC is gaining ground include transportation, identification, access control, product information lookup, and social networking/gaming.

Key Takeaways from Analyst:

The Near Field Communication market has significant growth potential in the coming years. Driven by increasing adoption of contactless payments worldwide and widespread integration of NFC technology in smartphones, tablets, and other consumer electronic devices. NFC provides users with enhanced convenience and flexibility for digital payments and data sharing. The transition away from cash to digital payments accelerated amid the pandemic and will propel further adoption of NFC-based payments going forward. Advancements in NFC chip technology are also enabling new use cases beyond payments in industries like healthcare, transportation, marketing, and advertising.

Despite attractive opportunities, high component costs remain a concern, especially for low-cost devices targeting price-sensitive markets. Interoperability issues between different NFC platforms could hamper seamless user experience. Lack of common standards may restrict usage across various industry verticals. However, ongoing collaborations between NFC stakeholders aim to address these challenges. Emerging applications of NFC technology in industries like retail, transportation and logistics indicate significant untapped potential. Asia Pacific represents the fastest growing regional market led by China, India, Japan, and South Korea. Meanwhile, countries in Europe and North America are likely to provide major demand driven by large digital payments adoption. Overall, the global Near Field Communication market is well positioned for steady expansion over.

Market Challenges: Security and privacy concerns

Security and privacy concerns are one of the major restraints hindering the growth of the global Near Field Communication market. As NFC technology enables contactless communication between devices like smartphones, tablets, etc. within a short distance of 4 centimeters, it raises valid security and privacy issues. Many users are reluctant to adopt NFC due to the lack of control over how and with whom their personal data is being shared. NFC allows sharing of payment details, personal contacts, and other sensitive information with a tap of phone. This lack of transparency in data flow raises red flags for users.

There is always a risk of eavesdropping and cybercrimes like identity theft when transferring data wirelessly through NFC. Hackers can potentially intercept contactless financial transactions and personal data being exchanged between NFC enabled devices. This threat of personal data breach discourages users from embracing new applications of NFC technology in mobile payments, access control, and even healthcare sector.

Market Opportunities: Integration of NFC in IoT devices

The integration of NFC technology in IoT devices presents a huge opportunity for the growth of the global Near Field Communication market. With most devices becoming 'smart' these days, the ability to easily share data between devices through tap and go contactless payments will provide a seamless experience to consumers. Technologies like Bluetooth and WiFi require pairing of devices whereas NFC simplifies the process through proximity. This ease of use will encourage the adoption of NFC among manufacturers of appliances, wearables, and other connected hardware. Contactless tagging through NFC can enable smart refrigerators to automatically generate shopping lists by scanning food items. Farmers can easily share crop details with buyers by tapping devices. IoT devices with NFC can authenticate users securely for access control without the need for passwords.

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Insights By Product Type - Rapid Adoption of Contactless Payments Drives the Growth of Non-auxiliary NFC Products

Based on product type, the non-auxiliary segment within the global Near Field Communication market is expected to contribute 54.1% of the market in 2024 share owing to the rising popularity of contactless payment technologies. Non-auxiliary NFC products primarily include payment-enabled devices and point-of-sale terminals that allow for tap-and-pay transactions. The convenience and security of contactless payments have encouraged many consumers to switch from cash and cards to mobile wallets and smart payment devices.

Major card brands like Visa, Mastercard, and American Express have invested heavily in tokenization and other technologies to enhance the security of contactless transactions. This has given merchants and retailers greater confidence to embrace tap-and-pay. At the same time, an increasing number of smartphones now come pre-installed with popular digital wallet apps like Apple Pay, Google Pay, and Samsung Pay, making contactless functionality readily available.

Insights By End User - BFSI Dominates as Banks Adopt NFC for Customer Engagement and New Services

Within the end user segment of the global Near Field Communication market, the BFSI segment is expected to hold 41.9% of the market share in 2024. This segment has seen strong growth as banks, insurers, payment networks, and fintech companies increasingly adopt NFC technology for customer-facing applications.

A major driver is the use of mobile wallets and contactless payments for retail banking. Partnerships between traditional banks and digital payment firms have made NFC payments a mainstream option across ATM, point-of-sale, online and peer-to-peer contexts. Near field communication facilitates fast, seamless transactions and fund transfers without the need for plastic. This improves the customer experience while allowing new revenue streams from transaction fees.

Behind the scenes, NFC enables streamlined processes like branch desk logging, digital authentication and automated Know Your Customer checks. For example, enabling customer identification via tap-and-go on a smartphone eliminates paperwork and speeds up new account openings. Banks are finding that such convenient self-service options enhance customer retention in the competitive digital era.

Another growth area is customized banking services through NFC-connected devices. Cards, fobs, stickers, and Internet of Things (IoT) sensors facilitate access to safe deposit boxes, automate expense uploads, and retrieve financial insights on the go. The potential for integrating NFC with wearables also creates opportunities in personalized financial advice and digital-physical banking blends.

Led by digital innovation, NFC consumption within financial services looks set to climb further. Both customers and providers stand to gain as contactless technology drives simplification, customization, and opens the door to novel applications across banking and beyond.

Regional Insights

North America has emerged as the dominant region in the global near field communication market. The region is expected to account for 37.1% of the market share in 2024. The large market size of the region can be attributed to high adoption rates of NFC technology across multiple industries such as retail, healthcare, and transportation among others. With majority of the top NFC technology providers and OEMs being headquartered in the U.S. and Canada, North America enjoys strong NFC industry presence and focus on innovation. Furthermore, the presence of advanced digital payment infrastructure and widespread usage of contactless cards and smartphones further propels the Near Field Communication market growth. States like California and New York in the U.S. are at the forefront in terms of deploying NFC-based transit ticketing and access control systems.

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The Asia Pacific region is poised to be the fastest growing market for near field communication globally. Multiple factors are contributing to the rising attractiveness of Asia Pacific Near Field Communication market. Countries like China, India, Japan, and South Korea are witnessing massive urbanization which is augmenting the installation of NFC POS terminals, automated fare collection gates, and smart posters. At the same time, these nations have the largest base of smartphone users who are open to embrace emerging contactless payment options. Additionally, the import and exports of NFC chips from Taiwan and manufacturing of NFC-embedded consumer devices in other Asia Pacific countries is positively impacting the region's NFC ecosystem. The region also attracts significant investments by technology giants for setting up R&D and manufacturing facilities to gain early access to the burgeoning opportunities.

While North America leads the way currently, Asia Pacific Near Field Communication market is gaining ground rapidly riding on the digitalization wave. While standards and regulations have facilitated the market growth in certain markets, lack of uniformity still persists globally. But with continuous technological advancements, an increasing number of innovative use cases and large-scale pilot projects across diversified industries, near field communication is expected to witness broad-based adoption worldwide, thereby escalating the global demand in the foreseeable future.

Market Report Scope

Key Developments

• In July 2022, Infineon Technologies AG, a global leader in semiconductor solutions provider, introduced NAC1080, a single-chip solution featuring an integrated H-Bridge for passive NFC lock applications. This microcontroller utilizes near field communication (NFC) technology, allowing smartphones to directly operate devices. Additionally, advanced local and cloud functionalities can be integrated into mobile apps developed by regional marketing partners, which reduces material costs and supports miniaturized product designs.
• In November 2021, STMicroelectronics, a global semiconductor leader, introduced a low-cost NFC Type 2 Tag IC featuring privacy enhancements and improved NDEF capabilities. This solution offers a new balance of cost and performance for high-volume applications such as consumer engagement, product information, and brand protection, thereby expanding growth opportunities within the near field communication market.
• In June 2020, NXP Semiconductors, a global leader in secure connectivity solutions, announced a collaboration with Mastercard and Xiaomi Inc., a prominent consumer electronics company, to introduce more convenient and secure contactless experiences in Russia. This initiative marks the first phase of a broader European rollout utilizing NXP's mobile wallet solution. The mWallet 2GO platform will power mobile payments for Xiaomi's Mi Smart Band 4 NFC wearable devices, facilitating an accelerated rollout across Europe by meeting OEMs' needs for easy, secure, and scalable wallet implementations.
• In April 2020, Infineon Technologies AG, a global leader in semiconductor solutions, completed the acquisition of Cypress Semiconductor Corporation. This strategic move enabled Infineon to offer its customers the industry's most comprehensive portfolio for connecting the real and digital worlds, thereby shaping digitalization, which is one of the most significant global trends.

Definition: The global near field communication market involves devices and services that utilize Near Field Communication (NFC) technology. NFC allows for contactless communication between devices like phones, tablets, and credit cards over short range distances typically under 10 cm. This market includes NFC-enabled smartphones and other mobile devices, NFC chipsets, contactless payment POS terminals, contactless point of sale systems, transit ticketing solutions and other accessories and services related to contactless transactions and data sharing using NFC technology on a global scale.

Market Segmentation

•  Product Type Insights (Revenue, US$ Bn, 2019 - 2031)
  • Non-Auxiliary
  • Auxiliary
•  End User Insights (Revenue, US$ Bn, 2019 - 2031)
  • BFSI
  • IT & Telecommunications
  • Retail
  • Healthcare
  • Hospitality and Transportation
  • Others
• Regional Insights (Revenue, US$ Bn, 2019 - 2031)
  • North America
    • U.S.
    • Canada
  • Latin America
    • Brazil
    • Argentina
    • Mexico
    • Rest of Latin America
  • Europe
    • Germany
    • U.K.
    • Spain
    • France
    • Italy
    • Russia
    • Rest of Europe
  • Asia Pacific
    • China
    • India
    • Japan
    • Australia
    • South Korea
    • ASEAN
    • Rest of Asia Pacific
  • Middle East & Africa
    • GCC Countries
    • Israel
    • South Africa
    • Rest of Middle East & Africa
• Key Players Insights
  • AMS AG
  • Broadcom Inc.
  • Fujitsu Limited
  • Gemalto (now part of Thales Group)
  • Identiv Inc.
  • Infineon Technologies AG
  • Inside Secure (now part of Verimatrix)
  • Marvell Technology Group Ltd.
  • MediaTek Inc.
  • Microchip Technology Inc.
  • Nordic Semiconductor
  • NXP Semiconductors
  • Qualcomm Incorporated
  • Renesas Electronics Corporation
  • Samsung Electronics Co., Ltd