By 2022, almost eight out of ten point of sale (POS) terminals installed by retailers worldwide will be able to accept NFC-enabled contactless payments, says a report from Berg Insight. Jessica Twentyman scans the facts.

Back in March, French retail giant Carrefour, the world’s second largest retailer by revenue, announced the launch of Carrefour Pay, a mobile payment system that enables customers to pay for their groceries with a wave of their smartphone at the point of sale (POS).

At its launch, the system was available in 3,000 Carrefour stores in France, and only to Android phone users carrying a PASS Mastercard or C-Zam payment card, but the goal is to make it compatible with all bank cards before the end of 2018.

The underlying connectivity for Carrefour Pay transactions is provided by near-field communications (NFC) – the same technology used by Apple Pay, Samsung Pay, Android Pay, and others. This enables a payment card or smartphone to ‘talk’ to a nearby in-store POS terminal – as long as that terminal is also NFC-enabled, of course.

For many retailers, this has been an obstacle to offering this type of mobile payment in the past. Few have been willing to ditch their existing POS hardware and replace it with new systems without any certainty that customers actually want to pay this way.

But that’s changing fast. As older systems approach retirement, POS vendors are increasingly including NFC support in new systems as standard, and smartphone-wielding customers are adopting contactless payments in ever-growing numbers, because it’s quick and convenient.

In retail, removing friction for in-store shoppers is one of the keys to retaining customer loyalty.

NFC inside

Last year, around 50 percent of the world’s POS terminals were equipped with NFC. By 2022, that figure is likely to be 78 percent, according to a report released last week by market analyst company, Berg Insight.

That’s driven, of course, by retailers’ hardware refreshes. On a global basis, almost three out of every five POS terminals shipped in 2017 included NFC. In Europe and North America, the figure was much higher, at 90 percent and 88 percent of POS terminals, respectively.

But inclusion of such a feature in a POS terminal doesn’t necessarily mean it will be switched on – a point that Berg Insight analyst Johan Fagerberg acknowledges.

But that too is changing: by the end of 2017, he says, approximately 30 million POS terminals worldwide were accepting contactless payments using Visa PayWave, MasterCard PayPass, or UnionPay Quickpass, which all come with payment card and smartphone options.

Berg Insight’s report predicts that global shipments of NFC-ready mobile POS (mPOS) terminals will grow at a compound annual growth rate of 29 percent in the next five years, to reach 34.5 million units by 2022.

“The growth is driven by the increase in mPOS terminal shipments from 18.3 million units in 2016 to 40.7 million units in 2022,” says Fagerberg, “as well as by a growth in the attach rate [the proportion of POS terminals with NFC switched on] from 53 percent to 85 percent.”

Internet of Business says

If the range of payment terminals is increasing, so too are the devices that consumers can use to pay. It’s not just bank cards and smartphones: wearables are increasingly important, with smart watches from Apple and Android leading the charge, followed by fitness trackers from the likes of Fitbit and Garmin.

There’s no reason, either, why countless other objects couldn’t become payment devices, too. For example, at the Rio 2016 Olympic Games, Visa gave athletes NFC-based payment rings, worn on the hand, to pay for goods and services in the Olympic Village. Australian bank Bankwest took a similar path with its launch in January this year of a payment ring called Halo.

Meanwhile, New Jersey-based start-up Radiius last year launched the NFC-enabled Bee, which it claims is the world’s “smallest biometrics-enabled digital wearable wallet”. The device is so small it can attach to the wristband of a watch or to a keyring, while still incorporating a fingerprint sensor to authenticate payments.

Plus: China leads the charge

In related news, China is leading the charge in mobile payments, according to a report on the FT this morning. In 2017, almost half the world’s digital payments were made in China, via apps such as Alipay and WeChat, according to PwC figures.

Both have also overtaken PayPal, the US’s biggest online payments operator: they each handled more payments in one month this year than Paypal’s $451 billion for the whole of 2017, according to market research firm Analysys. The trend has been led by millennials, says the FT.