Mobile and wearable payments are set to really take off over the next couple of years, according to a new study by Juniper Research.
The research firm predicts that by 2018 consumers will be spending $95bn (£66bn) per year via mobile and wearable contactless payments, up from less than $35bn (£24bn) last year.
The report — Contactless Payments: NFC Handsets, Wearables & Payment Cards 2016-2020 — says that the emergence of a range of connected wearables has piqued the interest of NFC stakeholders. In particular, devices such as watches and wristbands will be an important part of the market but Juniper cautioned that the sector would take several years to reach critical mass.
Despite the rise of wearable devices — with nearly 9 million Apple Watches shipped by the end of 2015 — the vast majority of these payments are still made by NFC-capable iPhones. As a result, Juniper forecasts that wearables as a whole will not account for more than 2% of non-card contactless payments by value in 2018.
While that sounds like a small number, it still means that $1.9bn (£1.3bn) will be spent via wearable devices.
The figures suggest that consumers will be happy to pay for small items like transport tickets via smartwatch, but prefer to pay via smartphone for larger purchases, Mobile Industry Review said.
The report also highlighted a change in the NFC ecosystem, with vendors including Samsung, ZTE and Lenovo now following in the footsteps of Apple and embedding security measures within their devices. This approach further weakens the contactless prospects for mobile network operators, which are effectively being cut out of the value chain, the authors pointed out.
“Most operator-led pilots and commercial ventures have now closed down,” said research co-author Nitin Bhas. “Apple’s entry into NFC gave the industry a much needed boost, and could well be seen as the tipping point for the technology, but at the same time it sounded the death knell for the mobile operator projects.”
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