NFC: Beyond the Hype

Last updated: 06 October 2014

The tech industry has been talking about NFC technology for a long time, and experts have repeatedly posed the same questions: “Are the uses and benefits of this technology realistic, or is it just hype?” And, “When will it become a productive part of the industry?”

Gartner’s 2014 Hype Cycles separate the hype from the commercially viable for today’s payment technologies. Specifically, the July report highlights the impact of NFC on today’s market and gives insight as to if and when the contactless tech will eventually reach mainstream adoption.

According to Gartner, innovations work their way through the Hype Cycle, reaching highs and lows throughout the journey. NFC is halfway through its journey to mass market adoption, on its way to the “Plateau of Productivity,” or mainstream use in 2-5 years.

Though not all innovations make it all the way through the cycle, Gartner’s report shows continuing potential for NFC payments, which we call Mobile EMV because NFC uses the same underlying technology as chip-based EMV credit cards do. We are seeing that NFC-based mobile wallets like Softcard (formerly Isis) and Google Wallet are receiving more recognition, offering consumers an abundance of options and opportunities to get involved in NFC. Now with the announcement of Apple Pay, Apple’s new NFC-based mobile wallet, NFC for payments has been in the spotlight like never before with a lot of positive attention, credibility and traction.

According to Gartner in the report, “for NFC to take off in payments, a compelling case must be made for the merchants and the financial ecosystem to invest in the necessary infrastructure.” Fortunately, since NFC payments are essentially a mobile form of EMV, the timing is excellent in this regard, as many merchants are looking to upgrade their existing infrastructure with terminal hardware and software that accepts EMV payments. Because most terminals shipped today are equipped to handle EMV and NFC payments, mass adoption of NFC payments may be as simple as merchants choosing to turn on the capability in their new terminals with software. Gartner agrees, stating “EMV deployment is likely to be aligned with mobile NFC deployments at the POS in the U.S.”

Non-payment NFC applications also have a lot of potential and may reach mass adoption earlier than payments. According to Gartner, NFC applications like mobile ticketing, loyalty programs and promotions will reach common use in the next 2-5 years, while payments are expected to take 5-10 years to be commonly integrated into consumers’ routines.

Based on this year’s Hype Cycles and the rate at which we’re hearing about and seeing NFC in the market it’s clear that NFC is not just hype—it has the potential to be a mainstay in our lives.