NFC POS terminals for one third of merchants within the next year says Eric Schmidt
Posted by Seth PlanckJune 23rd, 2011 at 10:53 AM Filed Under Latest News
NFC POS terminals for one third of merchants within the next year, VeriFone’s register rings
It’s a good time to be in the NFC POS terminals business, if Eric Schmidt of Google is correct. Google’s Executive Chairman spoke at the annual Cannes Lions Advertising Festival on Wednesday where he suggested that one third of U.S. POS terminals would accept NFC payments within a year. He did qualify this further by saying that this was his “educated guess”, but this does show how boisterous the mighty search giant feels about the emerging digital wallet industry. However, market penetration would have to be very compelling to move enough retailers and merchants to take up the NFC POS terminal technology at that pace.
The U.S has approximately 7 million credit card accepting locations and that would require a massive take up in sales of NFC POS terminals
Here in the U.S. the roll out of contactless NFC POS terminals started 7 years ago and thus far 2% have been upgraded, or 140,000 if you prefer, actual units rather than percentages. So if our math is correct that would mean nearly 2.2 million NFC POS terminals, when we minus off the current 140,000 already installed, would need to be purchased, installed and be ready to rock and roll within the next twelve months. Even if we break that figure into twelve equal parts it would mean that 182,758 NFC POS Terminals would need to come online a month, and that ladies and gentlemen, is a steep order – not impossible, but steep. What we take from this prediction is that whether these figures are correct or not it’s a great time to be VeriFone.
Mass take up in NFC POS terminals will pave the way for a trillion dollar industry
On the subject of who would pay the bill for upgrades Eric said, “That money is going to be spent not by Google and not by the phone guys but by the credit card companies, because the fraud rates are so much lower.” If the change does indeed mean a return on investment for the credit card companies it would make sense for the financial institutions to make this type of investment.
Speaking about his projection Schmidt remarked, “I judge that based on how long I think it takes, because the terminals are available now, the software is available now or this summer.” Then added, “How long does it take an infrastructure player to upgrade a significant percentage of their infrastructure – it’s on the order of a year, it’s not a week, it’s not a month but it’s also not five years… It’s an educated guess. Nobody knows how quickly this will occur but it’s in their interests to convert as fast as they humanly can,” reported FT.
Google will make its Google Wallet application for the iPhone, and that alone could create enough business to make it worthwhile for merchants to upgrade to NFC POS terminals
Of course for this kind of explosion of NFC POS terminals to occur there needs to be consumer demand and that is a little difficult to drum up with so few NFC phones in the marketplace. Here is what Eric had to say about the limited availability of NFC-enabled smartphones, “most (cell-phone) vendors” have announced they will include the necessary “near-field communication” secure element chips in their devices in the next year. We take this to mean LG, Sony Ericsson and Apple’s rumored new iPhone, as well as Samsung and Nokia who are already gearing up to provide multiple NFC smartphones by year’s end.
The thing we feel will peak many people interest was when Eric Schmidt spoke about Google Wallet and the iPhone and revealed that Google will make its Google wallet available for the iPhone if NFC is included in a future version of the device.
In conclusion 42,175 NFC POS terminals need to be sold and installed between now and this time next year if the Google Chairman’s predictions are to come true. Google will be making Google Wallet as an iPhone app and VeriFone and its competitors appear to be gearing up for the best year EVER! NFC POS terminals could be in your company’s near future and best of all ,the credit card company could foot the bill. Hands up – who wants some NFC POS terminals?