Updates to this story
Global use of near field communication (NFC) technology in mobile phones is expected to boom next year.
According to iSuppli this will lead to an explosive growth in the mobile payments business.
Analysts predict worldwide shipments of mobile phones with built-in NFC capability will rise to 220.1 million units in 2014. This is up 4.1 percent from the 52.6 million figure recorded in 2010.
For those not au fait with NFC, this is a short-range wireless connectivity technology based on magnetic field induction. It is used for secure communications between two electronic devices in close proximity to each other, which iSuppli says is perfect for mobile phone payments.
“Imagine paying your bus fare, buying a plane ticket or making an ATM/credit card purchase simply by holding your cell phone near a wireless terminal,” said Jagdish Rebello, director and principal analyst for communications and consumer electronics with iSuppli.
“This is the mobile payment revolution on the verge of being unleashed by NFC technology.
And companies including Nokia and Google are already beginning to pave the way for the boom, integrating this technology into their operating systems next year.
Nokia said it will support NFC in all new smart phone models introduced in 2011, while Google announced support for NFC in Android 2.3, set for release this week.
Mobile phone network providers are also getting the NFC ball rolling with iSuppli claiming that after two years of discussions AT&T Wireless, Verizon Wireless and T-Mobile have launched a joint venture known as ISIS that will develop a mobile payment system based on NFC.
ISIS will initially work with Barclaycard US and Discover Financial Services, but the companies have said they will eventually look at working with other banks and credit card providers.
Within the next 18 months ISIS hopes to have NFC-enabled mobile phones sold by the three carriers and an NFC ecosystem in place in some regions of America. It will then aim to have a full nationwide rollout by 2013.
“iSuppli believes that 2012 will be the make-or-break year for NFC,” Rebello said. “With all the ongoing and planned NFC trials in different regions of the world—as well as support for the technology by major stakeholders, including wireless operators, financial institutions and banks—it is imperative that business models be established that allow each of the nodes to see value in offering the service.
But it's not just payments that NFC will help with. Its chips are compatible with contactless smart cards meaning that devices that are NFC enabled can be used as access devices for secure facilities, such as office buildings and gated apartments. They can also perform authentication features, initiating setup for other forms of wireless communication, such as Bluetooth or Wi-Fi.