Contactless payment systems can be implemented in credit cards or smart cards for secure payments via radio frequency, infrared, cellular, or Bluetooth technologies. They can also be implemented in mobile devices for making quick purchases at concession stands, fast food restaurants, and stores though the use of Near Field Communication -- a short-range wireless connectivity technology.
The use of contactless payments grew more than 15% last year and the market is now valued at more than $200 million, according to ABI. It's expected to reach more than $820 million by 2013.
While contactless card rollouts were on track last year, the uptake of NFC in mobile devices was hindered due to difficulties of brining the technology to consumers. NFC-enabled mobile devices didn't ship in any volume at the end of last year and the forecast isn't that much better for the first half of this year, said ABI.
Due to delays in deployments, ABI had to adjust its forecasted quarter and annual figures for NFC device shipments from 1.1 million last year and 9.81 million this year to 0.65 million and 6.52 million respectively.
Credit card companies, banks, and wireless carriers have been launching various initiatives to get contactless payments in mobile devices off the ground, but not without running into challenges.
Both MasterCard and Visa have tested devices with embedded NFC and have been eagerly looking to team with wireless carriers and financial services providers on actual products. MasterCard is in discussions with several carriers and financial firms. Visa partnered with chipmaker Qualcomm and phone maker Kyocera on contactless payment-enabled phones.
Consumers are already using the technology in commercial rollouts in Germany and Austria and it's being trialed in London, Singapore, the Netherlands, Finland, and New York, in addition to other locations, according to the NFC Forum, an organization dedicated to advance the use of NFC.
ABI said the long-term growth of NFC remains promising. There will be widespread adoption of contactless payment systems, and over the next five years, demand for the technology will be driven by contactless payments in cards and mobile devices.