NFC for mobile payments is a flop, says Gartner

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Near-field communications technology has failed to gain traction for mobile payments, Gartner noted, forecasting that NFC will account for only 5 percent of the mobile payment transaction value in 2017.

By then, mobile payment transaction value is predicted to total $721 billion with more than 450 million users, according to Sandy Shen, research director at Gartner.

This compares with a mobile payment transaction value of $235.4 billion and 245.2 million users this year, according to Gartner stats.

Shen noted that NFC's transaction value estimate has been reduced by 40 percent through the forecast period due to "disappointing adoption" of the technology last year and the failure of NFC-based mobile payment services, such as Google (NASDAQ: GOOG) Wallet and ISIS, to catch on with consumers.

The ISIS partnership, set up by Verizon (NYSE: VZ), AT&T (NYSE: T) and T-Mobile, in 2010, is developing secure mobile payments using NFC technology. It launched its ISIS Mobile Wallet product in Austin, Tex., and Salt Lake City, Utah, last October.

Google launched its NFC-based Google Wallet mobile payment product in 2011. It recently integrated Google Wallet into its Chrome browser through an embedded Chrome Wallet app.

Not helping NFC adoption for mobile payments was Apple's (NASDAQ: AAPL) decision not to include NFC technology in its iPhone 5, launched last fall.

Gartner forecasts that money transfers and merchandise purchases will be the largest contributors to mobile payments, accounting for about 71 percent and 21 percent of total transaction value in 2013, respectively .

At the same time, the buying experience on mobile devices has not been "optimized," so buyers are spending less via mobile devices than via online e-commerce services and at retail outlets, according to Gartner.

Money transfer value continues to increase because users are transferring money by mobile phones more frequently due to the wider availability of services and transaction costs that are lower than those of traditional bank services.

For more:
- see the Gartner release
- read the Google blog
- check out the ISIS website

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