NFC and the Promise of Virtual Contactless Cards: ABI Research Explains

NFC technology is primed to ride on the coat-tails of contactless infrastructure already deployed for payments and ticketing. However, as much as NFC builds on existing contactless applications, it is also a technology that essentially replaces demand for the contactless cards.

Understanding where NFC and contactless card growth intersect and influence each other is important for the future of the contactless industry. NFC adoption in handsets will not only change the capabilities of mobile handsets around the world, it will impact the usefulness and potential of contactless cards.

“There is a trade-off in the contactless market that is starting to take shape, as NFC handsets near deployment,” says Jonathan Collins, ABI Research principal analyst and author of a recent report that examines the effect of NFC on an array of industries and existing technologies. “Wider use of contactless applications may not lead to greater demand for existing contactless card hardware.”

At present, contactless cards represent an emerging industry, as both transportation ticketing and contactless payments continue to grow at double-digit levels. In transportation, there is significant potential for single or limited-use ticketing to follow seasonal and higher-value tickets into contactless technology. However, hanging over this market is the spectre of NFC. The largest transportation systems issue millions of tickets monthly, but NFC offers a way to replace this with e-tickets downloaded directly to a rider’s mobile handset – drastically reducing ticketing costs to the transportation provider.

At this time, NFC in handsets remains largely in trials only, but early commercial rollouts are starting to come to market. Card-issuing businesses such as banking and transportation, which already examine the potential of contactless cards, find that the promise of NFC could make some of these card rollouts less appealing if NFC payment applications on mobile handsets are set to proliferate quickly.

ABI Research’s recent study Near Field Communications (NFC): Leveraging Contactless for Mobile Payments, Content and Access analyzes key drivers behind NFC and includes forecasts for NFC adoption, alongside those for contactless payment and ticketing infrastructure. The report forms part of three ABI Research Services: Mobile and Contactless Commerce, Mobile Devices, and Short-Range Wireless.

ABI Research is a leading market research firm focused on the impact of emerging technologies on global consumer and business markets.  Utilizing a unique blend of market intelligence, primary research, and expert assessment from its worldwide team of industry analysts, ABI Research assists hundreds of clients each year with their strategic growth initiatives.  For information, visit www.abiresearch.com, or call +1.516.624.2500.