Global Near Field Communication Market Is Estimated To Witness High Growth Owing To Rising Smartphone Penetration & Increasing Contactless Payment Adoption
The global near field communication market is estimated to be valued at US$ 29.01 Bn in 2024, exhibiting a CAGR of 17.3% over the forecast period (2024-2031). Furthermore, the increasing adoption of near field communication technology in sectors like retail, transportation, and healthcare is augmenting the market growth.
Market Dynamics:
Rising smartphone penetration and increasing contactless payment adoption are the major drivers propelling the growth of the global near field communication market. Over the past few years, the smartphone adoption has increased significantly across the globe. Near field communication technology is being widely used in smartphones to enable contactless payment through mobile wallets. According to a recent survey, the share of contactless payment transactions has surpassed card-based payments in 2023. With the increasing consumer inclination towards convenience and security in payment transactions, the adoption of contactless near field communication payment solutions is expected to rise substantially over the coming years.
Another major driver is the rapidly growing Internet of Things (IoT) technology. Near field communication has become an integral part of various IoT solutions and devices including smart home appliances, healthcare devices, POS machines, etc. The proliferation of IoT devices is anticipated to augment the demand for near field communication chips and modules globally during the forecast period.
Growing Adoption of Contactless Payments are Driving the Market Growth
Near field communication technology is seeing increasing adoption for contactless payments globally. Major payment brands like Mastercard, Visa, and American Express have started rolling out contactless payment cards that use NFC technology. Several retailers and merchants have also started accepting contactless payments made through debit/credit cards, mobile wallets like Google Pay, Apple Pay, etc. The convenience of just tapping the card or phone on the payment terminal is driving higher consumer adoption of contactless payments. This has significantly boosted the demand for NFC chips in payment cards as well as mobile devices. The growing penetration of smartphones is further fueling the demand.
Increasing Integration of NFC in Smartphones is Driving More Usage Cases
NFC technology is now widely integrated in flagship and mid-range smartphones. Original equipment manufacturers (OEMs) are pre-installing NFC antennas and chips in many of their device models. This is enabling more innovative usage cases for NFC that go beyond just payments. For example, NFC tags are being used for digital coupons, virtual business cards exchange, pairing Bluetooth devices, connecting to smart appliances, etc. Mobile operators are also launching NFC-based services like digital keys for hotels, offices, etc. The growing range of usage cases is motivating more consumers to use NFC on their phones regularly and driving the market growth.
Complex Technology is Hindering Wider Adoption
NFC technology involves secure communication between two devices in close proximity using magnetic field induction. Its implementation requires microchips and dedicated software. Integrating this complex technology into devices increases their costs. Many new device manufacturers in developing markets may hesitate to adopt NFC due to the technology complexity and added costs. The lack of adoption by such manufacturers can act as a restraint for the overall market growth in the short-run.
Fragmented Industry Standards are Limiting Interoperability
There exist some differences between the NFC standards used by various platforms and payment brands. Devices and services based on incompatible standards cannot communicate with each other seamlessly. This fragmented standardization has limited the interoperability to some extent. Consumers face compatibility issues while using their NFC payment cards or mobile wallets across different merchants. Resolving these standardization challenges requires coordination among different industry stakeholders, slowing down the wider NFC adoption.
Emerging Applications in IoT are Creating New Opportunities
IoT is one of the major trends where NFC technology can contribute and grow substantially. NFC tags can be deployed across various consumer and industrial IoT solutions for device configuration, authentication, pairing, ticketing etc. Automakers are considering NFC for secure vehicle access as well as payment integration in connected cars. Smart cities projects involve NFC for applications like electronic transportation ticketing, e-passports. The growing IoT market presents significant opportunities for NFC technology and chip manufacturers.
Mobile Wallets are Disrupting the Payment Industry
Mobile wallets that use NFC for contactless payments have emerged as popular alternatives to plastic cards. Technology giants like Google, Apple, and Samsung are aggressively promoting mobile wallet services. They provide value added features like loyalty point integration, bill pay, peer-to-peer transfer, etc. Consumers find mobile wallets more convenient to use than physical cards. Banks and payment networks are partnering with wallet providers recognizing this migration. This tectonic shift in payment trends firmly establishes NFC as the connecting technology, driving new opportunities.
In conclusion, factors like increasing contactless payments adoption, growing NFC integration in devices, and emerging IoT applications are fueling significant growth in the global Near Field Communication market. While technology complexity and standardization issues pose challenges, the market players are overcoming them by innovations. Overall, the market exhibits strong potential driven by ongoing digital transformation trends.
Link: https://www.coherentmarketinsights.com/market-insight/near-field-communication-market-4859
Key Developments:
- In July 2022, Infineon Technologies AG, a prominent semiconductor solutions provider, launched the NAC1080, a single-chip solution featuring an integrated H-Bridge tailored for passive NFC lock applications. This microcontroller leverages near field communication (NFC) technology, enabling direct smartphone control of devices. Furthermore, it supports the integration of advanced local and cloud functionalities into mobile apps developed by regional marketing partners, which helps cut material costs and facilitates the creation of compact product designs.
- In November 2021, STMicroelectronics, a leading global semiconductor manufacturer, launched a cost-effective NFC Type 2 Tag IC with enhanced privacy features and improved NDEF capabilities. This innovation provides a compelling balance of cost-effectiveness and performance, catering to high-volume applications like consumer engagement, product information, and brand protection. It aims to expand growth opportunities within the near field communication market.
- In June 2020, NXP Semiconductors, a global leader in secure connectivity solutions, partnered with Mastercard and Xiaomi Inc., a leading consumer electronics company, to enhance convenient and secure contactless experiences in Russia. This collaboration marks the initial phase of a larger European deployment leveraging NXP's mobile wallet solution. The mWallet 2GO platform will enable mobile payments for Xiaomi's Mi Smart Band 4 NFC wearable devices, supporting a rapid expansion across Europe by addressing OEMs' requirements for simple, secure, and scalable wallet integrations.
- In April 2020, Infineon Technologies AG, a leading semiconductor solutions provider, completed its acquisition of Cypress Semiconductor Corporation. This strategic move enhanced Infineon's capability to offer customers the most comprehensive portfolio in the industry, effectively connecting the physical and digital domains. This integration is pivotal in driving forward digitalization, a recognized and significant global trend.
Key Players:
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, and Samsung Electronics Co., Ltd
