Near Field Communication to reach US$46 billion by 2027
The global near-field communication market size was valued at US$17,875 million in 2020 and is projected to reach US$46,781.0 million by 2027, registering a CAGR of 14.8% from 2021 to 2027. This is according to a new report by the Market Statsville Group (MSG).
Near-field communication (NFC) is an array of protocols based on a wireless interface that enables communication devices and electronic gadgets to establish radio communication under proximity. The technology is mainly used in smartphones, laptops, and tablets for short-range data exchange. In addition, this technology is used for marketing and payment applications; however, many other applications, like medical devices and ticketing, adopt NFC.
In addition, NFC-enabled mobile phones are used for various applications such as chip-enabled mobile marketing, ticketing, identity and access, and gaming.
The NFC market is expected to display significant growth during the forecast period. This is attributed to various factors such as the growing need for convenient transfer and security of data and the rise in the proliferation of smartphones.
In addition, the demand for improved customer experience and the rise in demand for contactless payments due to the COVID-19 pandemic significantly fuel the market's growth. However, short operational range and security concerns may hamper the market's growth during the forecast period. On the other hand, factors such as an upsurge in the adoption of NFC-enabled wearable technology and technological advancements in NFC create lucrative growth opportunities for the market.
The pandemic has caused a recessionary economy that has forced various enterprises globally to shift their operations rapidly. Industries around the globe are being severely affected by the COVID-19-induced recession; though, the impact on the technology sector during the crisis was comparatively lesser than the rest of the economy. The lockdowns have encouraged a proliferation of contactless technologies such as near-field communication.
Moreover, the coronavirus outbreak severely impacts the global economy, changing all industries. While travel demand has decreased dramatically, businesses, including financial services, manufacturing, and retail, are under immense pressure to serve their customers in practical ways. For example, enterprises with hundreds or thousands of employees forced the governments to work from home. In addition, the COVID-19 pandemic has pushed consumers and merchants to rethink shopping and payment methods.
Although COVID-19 does not significantly impact the market's growth, the outbreak of COVID-19 will surely provide numerous opportunities for market growth during the forecast period. These opportunities include a rise in demand for contactless payment solutions, NFC technology in smart packaging for healthcare, and an upsurge in penetration of NFC into the sectors such as IoT, retail, government, medical, and security industries.
NFC offers better collaboration in corporate environments by ensuring speedy and secure sharing of documents, files, and confidential data. Since establishing a connection through NFC is approximately 100 milliseconds, it is much better and faster than other competing technologies, such as Bluetooth, which take a few seconds to establish the same. In the case of payments, the consumers' card details are stored on the mobile phone in a secure element, which takes the form of a Subscriber Identity Module, secured chips, or a secure digital card.
The presence of hardware encryption that can only be used near the point of sale makes it one of the most secure payments. Along with the security of consumer data, the card and reader need to be close to one another, making the process easier than swiping or choosing the options from a menu or entering a password. Thus, consumers are increasingly adopting this technology owing to varied applications. This creates a demand for NFC-enabled devices.
Near-field communication (NFC) can work for limited distances of 10-20 cm. However, its shorter operational range makes it prone to unintentional or intentional signal interferences. Also, the disruptions can result in failed communications between two NFC devices. This is expected to hamper the growth of the global near-field communication market.
In addition, as NFC facilitates the contactless transfer of information, users are potentially exposed to specific security issues, eavesdropping, data corruption, data manipulation, and hacking. Although the range of NFC devices is limited to a few centimetres, an attacker can retrieve usable signals up to a distance of 1–10 meters, depending upon the mode of signals. Thus, the threat of data theft and hacking restricts the penetration of this market globally.
There is an upsurge in the adoption of NFC-enabled rings, smartwatches, bracelets, fitness trackers, wristbands, and keyfobs across the globe. Wearable payment devices offer different benefits, such as anticipating the customer's need, providing better customer engagement, and improving the retailer's ability to track the customers' payments, significantly boosting the adoption of NFC-enabled wearable devices. In addition, the rise in the adoption of cloud-enabled rings for small-value transactions among end-users across the globe is expected to provide lucrative opportunities for market growth.
Furthermore, a surge in the adoption of NFC-enabled wearable technologies for healthcare is expected to facilitate and improve public health services. There is an upsurge in adopting such wearable technologies as it enables tracking patients' health status and help update the treatment process. Hence, the upsurge in adopting such NFC-enabled wearable technologies creates lucrative growth opportunities for the market.
The NFC readers, by product type, is projected to account for the largest market share. Therefore, based on product type, the near-field communication market is divided into NFC tags, NFC ICs, SIM cards, NFC readers, and others.
In 2020, NFC Readers had the largest market and accounted for 36.3% market share. NFC readers are essential active components in NFC transactions. They read and write cards and tags, enable communication from device to device, and interact with NFC phones. In addition, an NFC reader is best for secure access control e-payment, e-ticketing for events and mass transit, toll road fare collection, network authentication, and e-transactions.
The rise in the adoption of NFC readers to create better experiences in businesses primarily drives the growth of this segment. NFC readers enable enterprises to streamline payment options to increase efficiency and productivity. For instance, companies can focus on other core responsibilities contributing to their success and growth by making payments easier, such as employee training or marketing. In addition, with the growing technological advancements, manufacturers have integrated different unique features in an NFC reader. These advanced features include a secured access module, upgradeable firmware, and support for all NFC tags and devices.
Region-wise, the global near-field communication market is analysed across North America, Asia-Pacific, Europe, South America, the Middle East and Africa. During the forecast period, Asia Pacific is projected to hold the highest CAGR of 16.5% in the global near-field communication market. Asia-Pacific is expected to observe the highest growth rate during the forecast period due to increased adoption and awareness of NFC technology in the transportation and retail industries. In addition, the high penetration of smartphones in the countries such as India and China drives the growth of the near-field communication market in the region.
Moreover, an upsurge in demand for mobile payment and wireless applications of NFC is significantly fuelling the market growth in the region. Furthermore, government initiatives to promote the NFC in the banking sector across the region drive the market's growth. For instance, in July 2018, The Finance Ministry of India asked the banks in the country to start issuing near-field communication (NFC)-enabled credit and debit cards to their customers.
Every company follows its business strategy to attain the maximum market share. Identive, Infineon Technologies, MagTek, NXP Semiconductors, Broadcom, Qualcomm Technologies, Sony Corporation, Texas Instruments, Samsung Electronics, and Thales Group are leading players operating in the global near-field communication market. Top winning strategies are analysed by thoroughly studying the leading players in the near-field communication market.