Yankee Group: NFC is not the next 'Betamax'

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Despite surging momentum behind rival mobile payment technologies, Near Field Communications-based m-commerce services remain poised for significant growth over the next several years according to research firm Yankee Group, which forecasts NFC-enabled transaction values will exceed $355 billion worldwide by 2016.

Yankee Group remains bullish on NFC in the face of mounting skepticism: A recent Yankee survey reveals that 35 percent of payment industry decision makers believe other mobile solutions will relegate NFC to also-ran status comparable to Sony's proprietary Betamax home video standard, while 23 percent believe the technology is simply too cumbersome and expensive for merchant implementation.

"But NFC has one thing Betamax never had: a compelling differentiator," says Yankee Group Senior Analyst Nick Holland in an email sent to the media. "Its tap-and-go concept is a game-changer. By contrast, most non-NFC solutions require consumers to launch an app, optically scan, enter a PIN, etc. NFC eloquently does away with all that, making the user experience simpler, more pleasurable and universal. In other words, it makes money truly mobile." Holland adds that manufacturers including VeriFone and Ingenico are putting NFC capabilities into new devices now, and the EMV mandate for chip cards in the U.S. by 2015 will guarantee NFC's inclusion into the majority of point-of-sale products as well. 

"To speed the transition, all players must telegraph standard NFC use by applying the NFC Forum N mark to all NFC terminals, handsets, tags and devices," Holland states. "Also, card networks, banks, MNOs and hardware vendors must work in unison to create a positive and compelling case for merchants around NFC, particularly underscoring its long-term benefits."

Google (NASDAQ:GOOG) launched its NFC-based Wallet service in May 2011, and over the weekend, Sprint Nextel (NYSE:S) released the Nexus S 4G, its second Android device with Wallet support. Isis, the nationwide NFC network spearheaded by Verizon Wireless (NYSE:VZ), AT&T (NYSE:T) and T-Mobile USA, is expected to begin consumer trials in mid-2012.

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