A new Berg Insight report estimates global shipments of NFC-enabled POS terminals increased 33 percent year-over-year in 2014. That amounts to a total of nearly 10 million, bringing the installed base to 21 million units.
Seventy-five percent of units shipped in the U.S. were NFC-capable, compared to 80 percent in Europe. By the end of 2014, the U.S. had 17 percent of the worldwide total, with more than 3 million. The installed NFC terminal base is predicted to grow 28 percent per year to reach 75 million devices by the end of 2019. This means NFC-enabled POS terminals worldwide would climb to 70 percent, up from 28 percent in 2014.
Although retailers have been installing NFC devices at the POS for a number of years, many have failed to make the contactless capability operable. According to Berg, many more merchants are beginning to activate those sleeping NFC capabilities. The report approximates the number of POS terminals worldwide accepting contactless payments at the end of 2014 was 9 million, up 300 percent from 2012, when just 2 million POS terminals worldwide had contactless features enabled.
Host card emulation (HCE) has boosted NFC as it allows issuers to load card credentials for mobile wallets remotely. This eliminates the need for issuers to negotiate with carriers to gain access to the device’s secure element. However, NFC as a compliant solution has not fully identified what and how it will comply with Regulation II (Debit Card Interchange Fees and Routing). Even as HCE finds more use cases, it must be deployed in a manner that provides the merchants choice and in a way that the issuer does not directly or indirectly steer the path of a transaction. NFC, just like EMV, leverages brand specific technology, and as such, an effort is needed to deploy NFC using a common AID which preserves routing choice.
Merchants’ increased interest and movement in offering NFC technology at the POS is a positive step toward more widespread use of contactless payments. It is important that a scalable and consistent approach be employed during implementation. Retailers could be the key to ensuring standards are used and choice is preserved.