85% of POS terminals will be NFC capable by 2016 thanks to Google Wallet buzz

ABI Research projects that 85% of POS terminals will be NFC capable by 2016 thanks to Google Wallet buzz

ABI Research has released a report detailing how Google Wallet and NFC phone buzz has caught the imagination of retailers and projected how they will adopt NFC POS terminals. It is projected that by 2016, 85% of POS terminals will be NFC-enabled and consumers will be able to pay with either an NFC phone or an EMV (chip and PIN) card. This in many ways contradicts many other reports that have projected that NFC adoption will be slower. Verfione’s CEO, Doug Bergeron, said at the FortuneTech conference just a month ago that NFC projections were blown out of proportion. Eric Schmidt of Google, however, has projected a more aggressive adoption rate than ABI and foresees one third of merchants taking on NFC POS terminals by mid next year.

ABI Research projections on NFC POS terminals

ABI believes that one third of POS terminals will be NFC capable within 12 months which is robust adoption to say the least, and isn’t so far off what seemed an astronomically high 50% quoted by Eric Schmidt.

Senior Analyst Craig Foster said,“Contactless has the potential to change the way we pay for goods completely, significantly reducing time spent queuing at the point of sale. It also represents an almost perfect fit for the vending industry, because:

• The increased speed and simplicity of check-out go hand-in-hand with the very essence of the vending machine – to provide goods quickly and conveniently;
• The fact that small-value transactions – typically under $25 in the US – do not need to be authenticated by signature or PIN entry is very appealing to vending machine operators.”

M2M Practice Director, Sam Lucero, adds,“Contactless technology is also in the very early stages of adoption in ATMs: rather than inserting the card, a customer waves it in front of the machine and enters a PIN.”

Ingenico, VeriFone, and Hypercom are the three leading vendors of POS terminals and command most of the market. Ingenico has stated that 21% of their POS terminal orders are already NFC capable and we have to assume that Verifone and Hypercom, which has just been acquired by Verifone, experience similar demand for NFC POS terminals. If 21% of POS terminal orders are for NFC capable POS terminals, and let’s say the average terminal is in service for around 5 years, it does make sense that 85% could be NFC capable by 2016. The report in question from ABI Research is their “Cellular-enabled POS Terminals, ATMs, and Vending Machines” study which can be found here. We can’t see into the future, but lawdy knows we try, and we think ABI may have hit the mark with its projections for NFC POS terminals, but only time will tell.