A report from Juniper Research has found that the number of contactless transactions via mobile handsets will exceed 9.9 billion globally by 2018, up from just over 3 billion this year.
The report found that two key disruptive factors – HCE (Host Card Emulation) and the anticipated launch of Apple’s iWallet – were likely to spur contactless growth in the medium term. HCE transforms an app into a virtual smartcard, so that for NFC (Near Field Communication) transactions, the SE (secure element) no longer has to be physically present in the handset.
According to the report, utilising a remote, HCE-based SE can reduce time-to-market and means that banks can retain control of their customers without needing to partner with mobile network operators. It also observed that the recent decision of Visa and MasterCard to endorse HCE should reassure banks who may have been concerned about the relative security of transactions.
Meanwhile, the report noted that it is looking increasingly likely that Apple will introduce an iWallet in Q4 2014 which enables secure contactless payment via BLE (Bluetooth Low Energy) and a second air interface. It argued that Apple’s entry into proximity payments would drive growth in the wider contactless space by increasing consumer awareness of the mechanism, indirectly benefitting adoption of NFC.
However, the report warned that while the industry as a whole would receive a boost from these factors, network operators would lose out. According to report author Dr Windsor Holden, “With the emergence of HCE, the operator role at the heart of the NFC value chain is no longer sacrosanct. Banks can now go it alone and as a result the scale of the operator opportunity is significantly diminished.”