Contactless NFC payments
Payments using the protocol of wireless data transmission of NFC.
Contactless payments are one of segments of the market of mobile payments.
Systems of NFC payments
Contactless payments by the bank card
The largest NFC projects of international payment systems are:
- Visa payWave
- MasterCard PayPass.
Contactless payments by the smartphone
NFC payments in Russia
Russia was included into the five of the countries on purchases by means of wearable devices
At the beginning of December, 2019 the MasterCard company published results of the research devoted to popularity of technologies of payment by means of wearable devices including the smartwatch, rings or bracelets with support of NFC technology.
Holland was at 1 place on payments by wearable devices: there takes place every third transaction (33%). On the second place – Britain (18%), further there are Switzerland (8%) and Russia (7%). It concerns as the active devices (requiring charging), and passive (not requiring charging): bracelets, rings and normal hours.
Most of all payments by wearable devices in the world are the share of Australia which the Netherlands follows. The USA is in rating on the 8th position, and all other places in the top ten are taken by the European countries. The number of payments using wearable devices grows in Europe: total number of such transactions which are carried out last year in 19.4 times more, than in North America.
In Mastercard say that Europeans including Russians, even more often pay purchases with wearable devices with contactless technology. So, in a year the number of the payments perfect using such gadgets increased in Europe by 8 times. To users well to more than 30 types of such means of payment.
In 2019 61% of purchases in the European shops were paid using contactless technologies. The company connects it with wide circulation of wearable devices with NFC. Extent of implementation of this payment method in retail stores also considerably increased – from 42% to 70%
According to calculations of MasterCard, by December, 2019 every fifth adult wears the smartwatch or a fitness bracelet. By 2020 the world market of wearable devices will be measured by 30 billion euros, predict in the company.
In a year the popularity of contactless payments from smartphones grew in the Russian Federation twice
Data analysis for October, 2018 and 2019 showed that:
- for last 12 months the number of users of services Apple Pay, Google Pay also Samsung Pay increased twice, and users of "plastic" – only by 3%;
- in October, 2019 the holders of cards of MTS of Bank using mobile services of contactless payment paid off with them in outlets by 3.7 times more often than "plastic"; the previous year – is 3.2 times more often.
As noted in MTS Bank, the popularity of payment using smartphones and gadgets in Russia grows thanks to convenience and safety of payments and also wide circulation in outlets of cash POS terminals with contactless NFC readers. According to the international consulting company The Boston Consulting Group (BCG), Russia is the largest market on the volume of banking activities using digital services.
Use of the smartphone at payments continues to show rapid growth – turnovers and the number of transactions from October, 2018 to October, 2019 grew almost twice while the gain on "plastics" made only 11.2% and 18.4% respectively.
- In October, 2019 the share of contactless mobile services in a total turnover of operations with cards increased to 18.1% from 12.3% the previous year, and a share of transactions – to 20.8% from 14.2% respectively.
- At the end of 2019 Russians pay in the smartphone also more often: on average 23 payments a month against 16 from "plastic". In October, 2018 such payments was 23 and 14 respectively.
- In October, 2019 the payment amount from one card through services of contactless payment made 12,900 rubles in comparison with 12,700 rubles the previous year, from "plastic" – according to 10,100 rubles and 9500 rubles.
In October, 2019 Apple Pay was the most popular service among clients of MTS of Bank. While in 2018 and in the first half of the year 2019, according to MTS, iPhone took only the third place on sales, considerably conceding to smartphones Samsung and Huawei/Honor.
- Via the Apple Pay 49% of transactions, via Google Pay – 31% and Samsung Pay – 20% are made. For comparison, in the same month of last year 53%, Google Pay – 25% and Samsung Pay – 22% of transactions were the share of the Apple Pay.
In MTS Bank consider that growth of payments using mobile services of contactless payment is directly connected with distribution and availability of NFC smartphones.
- The share of sales of NFC smartphones in retail network MTS in January-September, 2019/2018 grew to 49.1% from 30.5% of a total quantity of the sold smartphones.
- In nine months 2019 of sale of NFC smartphones grew in kind by 67%, in monetary – for 32% in comparison the same period of 2018.
- The average price of the NFC smartphone in 2019 was 21,840 rubles, in the past – 27,774 rubles.
According to MTS of Bank, the popularity of contactless payment services for payment of trips grows in public transport: 7.7% of transactions in October, 2019 against 5% in October, 2018. Including, more than three times the share of payments in buses (passenger city and long-distance runs) – grew to 2.9% from 0.9%, by one and a half times the share of transactions for trips to the taxi – increased to 2.5% from 1.7%. Purchase of food in supermarkets and grocery stores and also payment in cafe and restaurants, as well as a year ago – the most popular payments. In October, 2019 63% of transactions from smartphones and 54% from "plastic" are made in these categories. The previous year these indicators were 66% and 55% respectively. Contactless mobile services are still much more popular than "plastic" in cafe and restaurants. In places of public catering payment by the smartphone is twice more popular than "plastic" (19.7% against 9.5%) on a share of transactions. The choice of a payment method depends on audience: younger and technology advanced uses services of contactless payment, more adult nevertheless is drawn towards "plastic" more.
The market of cashless payments in Russia for 3 years grew twice
The volume of the Russian market of cashless payments in Russia for 3 years increased twice. On September 19, 2019 journalists were reported about it by Ekaterina Petelina who resigns from the post on November 1, 2019 of the CEO of representation of Visa in Russia.
| ||At the same time we look at such indicator as penetration of electronic payments into daily expenditure of households which grew from less than 20% to 37% — growth of the market happened due to this converting — she told.|| |
According to Petelina, the number of POS terminals for 3 years increased from 10 by 1000 people up to 19 on 1000 people that corresponds to indicators of the largest payment markets of the world. At the same time 90% of terminals in Russia are capable to accept proximity cards and devices.
According to Kommersant, in May, 2019 the vice chairman of the board of the Bank of Russia Olga Skorobogatova estimated a share of cashless payments in the retail turnover in 61%. She noted that the Central Bank is going to increase this share up to 80% in four years. The forecast for the end of 2019 — 66%.
Ekaterina Petelina claims that by September 19, 2019 more than 70% of payments in Russia are the share of contactless technologies. In the first quarter 2019 Russians made 6.8 billion such transactions for the amount of 5.7 trillion rubles.
According to Petelina, users of mobile payment systems purchases make more often. In the summer of 2019 OTP Bank opened that on average his clients make 11 card purchases a month, but for users of Apple and Google Pay this indicator is nearly 3 times higher — 31 purchases a month, Vedomosti writes.
Sellers in Russia began to use instead of POS terminals smartphones for payments according to cards
On September 19, 2019 it became known that sellers in Russia began to use instead of POS terminals smartphones for bank card payments. Promsvyazbank started SoftPos technology for contactless payments for cards of any banks. Read more here.
Data of SAS and PLAS magazine
The SAS company, the player in the market of a business intelligence, in partnership with the PLAS magazine conducted in the spring of 2019 survey to find out as far as services of contactless payment are the Apple Pay, Samsung Pay, Google Pay and others – compete with usual bank cards. Results showed that the future behind contactless payments irrespective of specific form factors: only 8% of respondents use exclusively contact plastic cards. All other survey participants select these or those instruments of contactless payment – both mobile services, and classical cards, – including their different combinations.
Plastic still saves the positions. On survey results, a half of respondents most often use them. At the same time cards with the contactless and contact interface became the most popular payment instrument: the main means of payment they were called by 42% of respondents. Among alternative contactless services by the most popular there was an Apple Pay: with its help most often make payments of 21% of respondents. Android Pay and Apple Pay services are preferred by 6% and 4% of respondents. Other survey participants, except for the mentioned 8% of supporters of contact cards, do not select for themselves only one main means of payment, and use approximately equally different payment methods in these or those combinations: card and cash (10%), card and mobile services (8%), etc.
It is curious that contactless charms and bracelets with the cards of payment service providers linked to them still remain rather curious gadgets, than the working payment instrument. Only 2% of respondents reported that they use similar devices, however nobody called them the main means of payment.
In spite of the fact that bank plastic cards still remain the main contactless payment instrument, mobile form factors are also used rather often. So, 46% of respondents resort to them daily – including those users who designated plastic as preferable means of payment. About 13% of respondents are calculated by means of such services several times a week, 4% – several times a month, and only 31% are not familiar with them in practice.
Basic reason on which mobile contactless payment form factors find popularity 73% of respondents called lack of need to carry with itself the card – to make payment, there is enough only the smartphone. An opportunity to perform operation for the small amount without PIN code became the second most important advantage – it was emphasized with 59% of respondents. For 43% the contactless technology as such became a key argument for benefit of mobile payment services, and another 20% attract additional bonuses which can be received at making payments in such a way.
Despite the high level of loyalty to mobile contactless form factors, 51% of respondents faced difficulties at their use. At the same time 23% were connected with insufficient prevalence of similar tools – the payment did not manage to be made as the seller was not ready to accept it in such a way. 28% of respondents had problems with reading. Single answers fell on such options as hangup of phone after payment, difficulties with reading of a fingerprint in the Apple Pay, impossibility of payment because of discharging of phone, etc.
Nevertheless, survey participants are sure that behind contactless mobile form factors the future – such point of view was stated to 97% of respondents. At the same time 40% consider that they will force out plastic over time, and 57% believe that they will be widely adopted along with plastic cards which will also remain popular means of payment.
Given to MasterCard and Visa
According to data of MasterCard, the number of contactless transactions on cards of this payment system in Russia increased in 2016 more than four times. In Visa counted that proximity cards in 2016 41% of citizens of Russia owned, 38% regularly used them. According to poll of this international system, the main arguments for benefit of this payment method are the convenience (83%), speed (56%) and novelty of technology (18%). 52% from those who still did not get it intend to issue the proximity card with a high share of probability. At the same time 77% of respondents are sure of safety of transactions on proximity cards: for payment of large purchases the proximity card was used by 58% of respondents.
Start of the systems Visa, MasterCard, Samsung Pay, and the Apple Pay in Russia
In 2016 the contactless payments started Visa and MasterCard payment systems.
According to data of the research J'son Partners Consulting, at the end of 2016 the audience of users of contactless payments in Russia, including mobile payments using NFC technology, can reach 7.5 million people.
This segment received an additional boost to development with an exit in 2016 to the Russian market of the mobile payment services based on NFC such Samsung Pay as well as Apple Pay. For the first week of work of Apple Pay service over 125 thousand Russians loaded into it the cards. And according to bank "VTB 24", Samsung Pay turnover on the cards of clients of bank linked to service only for the first week of work exceeded 1.2 million rubles.
The Central Bank expects growth of contactless payments
In 2017 in the territory of Russia contactless payments will work at three payment systems: Visa, Mastercard and National Payment Card System. The Bank of Russia predicts the sharp growth of contactless payments in the territory of the country in 2017-2018. The vice-chairman of the Central Bank of the Russian Federation Olga Skorobogatova on a performance in the State Duma told about it.
In 2017 this system will be put into operation by the National Payment Card System (NPCS).
"It is our own technology, we develop it irrespective of other international systems, but it will work by the principle of international standards: it will be read out everywhere - and at us, and abroad", - the deputy chairman of the Central Bank of the Russian Federation told.
NAFI: NFC payments from the mobile device already tried 5% of Russians
Using the mobile phone 5% of Russians have experience of contactless payment, and proximity bank cards used 24%. Results of the All-Russian survey conducted by Analytical center NAFI in October, 2016 demonstrate to it.
About a third of Russians (30%) regularly pay daily purchases with a non-cash method. It more is peculiar to a highly educated part of the population (43%) and youth at the age of 24-35 years (40%). Nevertheless most of Russians (70%) still pay daily goods and services with cash.
Know about existence of bank cards with a possibility of contactless payment up to 79% of Russians, at the same time told that 24% of respondents used them. Have no experience, but well know about existence of such cards of 39% of Russians, another 16% heard about them in general. Much more often experience of contactless payment by cards was announced by Russians with the higher education (30% against 22% of Russians without the higher education).
65% of Russians are informed on an opportunity to make contactless payments using the mobile phone. However only 5% used this opportunity. Another 39% of Russians are informed on them, but did not practice such payment method, and every fourth was recognized that he heard about this technology only in general (21%). Know nothing about a possibility of contactless payment of purchases using the mobile device more than a third of Russians (36%).
Existence in phone of technical capability to register contactless payments will become the defining characteristic of purchase of the following smartphone for every tenth Russian (10%). For 30% it will be a powerful bonus. Every second noted that this technical function will not play a role at purchase of the gadget (50%).
Market research from bank Russian Standard
The bank Russian Standard provided in September, 2016 statistical data about dynamics of contactless payments of the acquiring network (one of the largest in Russia) for 2014, 2015, the first half of the year 2016.
The share of contactless payments on turnover grew from 0.5% in 2014 to 1.2% in 2015. And in the first half of the year 2016 made already 2.1%. It is connected with convenience of using of such cards to payment of purchases in segments "restaurants" including "fast food" and also in a retail segment – the transactions providing the greatest share in total amount. More than 90% of turnover on contactless payments are the share of these 2 segments.
At the same time in 2016 the share of contactless transactions in a segment "restaurants" reaches 6.6% of all bank card payments. The bank sees Russian Standard on analysis results of statistical data that at restaurants (especially fast food) people pay the most part of small purchases with cards using contactless technology.
In general the trend by the number of transactions reminds a trend on turnovers - the share grew from 1.1% in 2014 to 2.9% in 2015. And in the first half of the year 2016 it made already 5.7%.
But it should be noted in addition that the share of contactless transactions on the number of transactions in a segment "restaurants" reaches 9.1% in 2016, and in 2015 this indicator was at the level of 2.4%, in 2014 - 3%. The entertainments segment – 3.5% in 2016 is in the second place on the frequency of contactless payments.
It is obvious that small purchases generally fall on contactless payments. An average bill of payment according to cards in acquiring network of bank Russian Standard makes in 2016 1,253 rub on normal payments by the card, and on contactless payments – 450 rub, for comparison: 2015 – 1,222 rub and 540 rub; in 2014 - 1,408 rub and 584 rub respectively.
It is also necessary to note that in acquiring network of bank an average bill on a segment "restaurants" on contactless payments are 30% lower, than on normal payments by the card (beskontakt - 323 rubles against – 456 rubles contact payment). The similar situation in a "hotels, placement" segment - an average bill of contactless transaction is 3 times lower, than contact. And here in a health segment a reverse situation – an average bill on contactless payments - 11,186 rubles, against 2,971 rubles on normal payments by the bank card.
In recent years the considerable gain in acquiring network of transactions on cards with contactless technology from new significant card issuers is not mentioned. The number of large emitting banks seriously grew in the first years of start of technology, since 2011. Now growth of indicators goes due to the number of transactions, turnover and the average check.
The popularity of NFC payments for travel by the Moscow subway grew by 3 times
The number of the passengers paying travel by the subway using service "The mobile ticket" for half a year increased three times. Maxim Liksutov, the Deputy Mayor of Moscow told about it, the Head of Department of transport and development of road and transport infrastructure in March, 2016.
"Already 37 thousand people a month pay travel by the subway using mobile phones with the special NFC module. And the number of users of new service constantly grows. Thanks to input of the new booking menu we already managed to reduce twice queues in subway ticket offices and three times to reduce the number of the passengers purchasing tickets at drivers of land transport. "The mobile ticket" allows passengers not to think of purchase of tickets and does travel by city transport even more conveniently for Muscovites" — Maxim Liksutov explained.
Today with support of NFC technology in Moscow produced about 150 thousand SIM cards. Their owners can pay travel by the bus, the tram and the trolleybus, having just attached the mobile phone on the reader device of the validator.
VimpelCom and MegaFon experiment with NFC in the subway of St. Petersburg
VimpelCom temporarily winded down in October, 2012 the project on implementation of payment of journey in the St. Petersburg subway using NFC technology from the mobile phone. The company explains it with end of a pilot project which passed within four months (from May 18 to September 26).
'In its framework there took place comprehensive study of consumer demand for service and NFC technology opportunities. The results received by us in general demonstrate high efficiency of technology for development of services of payment of travel by public transport and also their demand the mass user, and will help us to implement a full-fledged scalable solution for mass application which development the company is going to complete in 1 half of 2013', - the press service of VimpelCom reported.
The solution used now developed in cooperation with Ambik Tek company and brought into test operation even in the summer of 2011 from the very beginning had a number of shortcomings: it was required to install the special NFC module by means of a loop connected parallel to the SIM card and placed under the accumulator in phone. Considering a tendency to do phones the thinnest and compact, in the majority of modern devices the module (even considering existence of four different form factors) or was not located, or it was difficult correct to set a loop. Beeline expressed 80% of phones support, however, most likely, it was talked of all available park, but not of modern models. At the same time the built-in NFC modules which are available in modern smartphones were not supported (for comparison, MegaFon started in Yekaterinburg a system with external chips, but also and support of the built-in NFC). Especially as target audience of service are just the advanced subscribers who are interested in new technologies which more likely use incompatible Samsung Galaxy S III, than compatible Nokia 3310.
The date of implementation of the NFC project of Beeline was repeatedly postponed. So, in May, 2012 it was talked of transition from test pilot operation to commercial pilot operation between which difference consisted that at the initial stage starting in the summer of 2011, the service was tested by only 100 people (they were selected by Beeline independently, then they participated in focus groups), and in 2012 about 2000 subscribers were going to attract, at the same time anyone could test service.
Beeline does not disclose the actual quantity of beta testers, commenting that not the mass character of testing, but achievement of certain results was the purpose. However it is easy to count their quantity: judging by number of the carried-out transactions, they were no more than 600, as everyone testing, buying for 125 rubles the module, received also 5 trips, and, respectively, would hardly not begin to use them. The commercial pilot had to begin in December, 2011, however because of difficulties with a customs clearance of modules of their delivery were broken and start had to be transferred. It had to last prior to the beginning of October then at once transfer to commercial operation was planned. Now it is postponed almost for a year that shows the relation to the project as to low-priority.
Actually, the NFC project is not commercial, but image. Experience of MegaFon whose NFC - "Megachipami" in the five-million city uses couple of hundreds of people it already proved: at the current implementation payment NFC projects are toys for geeks, absolutely unsuitable in real life.
Using NFC announced plans of the organization of a system of pass to the St. Petersburg subway also MegaFon. Besides, the systems of contactless payment can work, for example, in cafe (such project is already developed), and NFC phone can be used as the admission — in school, university, on some objects requiring registration or identification, the employee of the press service of MegaFon says. Also it will be possible to be connected to a discount system — the person will be able to integrate all discount cards which are available for him and to use phone to receive a discount, he promises.
The forecast of volume of payments in Russia in 2012 - 30-150 million rub
According to forecasts of J'son & Partners Consulting, the size of the market of operator mobile payments of "the big three" of mobile operators in 2012 will be about 15-18 billion rubles. At the optimistic forecast, by 2017 the volume of the mobile payment transactions in Russia executed by means of devices with support of NFC will exceed 50 billion rubles, i.e. will be about 1% of the world market. The most part of the polled experts estimated this indicator at the end of 2011 at the amount less than 30 million rubles; the forecast for 2012 – 30-150 million rubles.
For July, 2012 in Russia pilot projects for demonstration of opportunities of NFC, working off of tariffing and technology aspects, business models and so forth are implemented. The pacing restraining factors of development of NFC in Russia is a low knowledge of potential users of opportunities of this technology, insufficient development of infrastructure and imperfection of the Russian industry legislation.
The main participants of the arising market of NFC – "the big three" of mobile operators, the largest banks and payment systems. So, MTS payment of goods in vending machines of UVENCO company (both in Perm), joint with MasterCard and MTS-Bank the payment solution on the basis of NFC technology for contactless payment of goods and services from phone in MasterCardPayPass technology, etc. implements the NFC projects "Fast Gas Station" at Lukoil gas stations.
8 banks emit the MasterCard PayPass cards
For July, 2012 8 Russian banks are issuers of MasterCard PayPass proximity cards which use considerably reduces holding time of clients in the field of retail and services.
2011: MTS and VimpelCom test NFC in the subway
In 2010 MTS announced system testing plans of NFC oplaty Drive in the Moscow subway. Testing is complete in the I quarter 2011, the decision on a project startup in commercial operation depends on the management of the subway, told the source close to MTS.
On October 5, 2011 it became known that MTS starts the Russia's first system of instant mobile payments based on NFC technology. Using phone with the NFC antenna it will be possible to pay for gasoline at Lukoil gas Station — at first in Perm, and then and in other regions (Is more detailed about the project)
Competitors of MTS also test NFC payments. VimpelCom until the end of 2011 was going to bring into commercial operation the NFC project in the St. Petersburg subway, the press secretary of the operator Anna Aybasheva promised. But the operator is guided, according to her, on mass commercial operation of NFC and studies several versions of joint projects not only with transport companies, but also with large retailers and banks. Earlier VimpelCom reported that it tests contactless payment of journey by trains of Aeroexpress.
World market of NFC payments
2019: Mastercard: payments by wearable devices gain popularity in Europe
On December 2, 2019 it became known that Europeans including Russians, even more often pay purchases with wearable devices with contactless technology. In total in a year the number of the payments perfect using gadgets increased in Europe by eight times. This trend was widely adopted – an opportunity to receive a smart device with payment functionality is in 26 countries of Europe, at the same time to users well to more than 30 types of such means of payment.
The Netherlands wins first place in Europe on payments by wearable devices: there takes place every third transaction (33%). On the second place – Great Britain (18%), further there are Switzerland (8%) and Russia (7%). It concerns as the active devices (requiring charging), and passive (not requiring charging): bracelets, rings and normal hours.
Most of all payments by wearable devices in the world are the share of Australia which the Netherlands follows. The USA is in rating on the eighth position, and all other places in the top ten are taken by the European countries. The number of payments using wearable devices grows in Europe: total number of such transactions which are carried out in 2018 in 19.4 times more, than in North America.
The countries Top-10 of Europe on payments by wearable devices:
In process of development of technologies for wearable devices, fashion brands introduce new solutions on the market and create gadgets which become not only functional, but also trend. For December, 2019 every fifth adult wears the smartwatch or a fitness bracelet, and by 2020 the world market of wearable devices will reach estimated value in 30 billion euros worldwide. Besides, the payment functionality of such devices allows to make easily and conveniently payment by one contact or the movement. From the freshest examples in Russia – with MasterCard the SwatchPAY service is recently started!.
Users can use wearable devices in any places where payment by one contact works. Contactless payments completely changed a situation in international market, having gained popularity among issuers, sellers and buyers, especially in Europe. The popularity of contactless payments grows; they make 61% of all transactions in the European shops – this indicator increased by 23% since the beginning of 2018. Acceptance of this payment method in retail stores also considerably increased – from 42% to 70% for the same period. The high level of recognition and implementation open the road to payments by wearable devices.
| ||We in Mastercard see that the appearing payment methods become more popular, users want to make payments quickly and conveniently. It is remarkable, how easily holders of cards pass to modern payment technologies which correspond to their 'digital' way of life. Wearable devices allow to make payments most conveniently and easy, ensuring at the same time necessary reliability and safety,|| |
Wearable devices, for example, rings, bracelets or the smartwatch, have the built-in technology of wireless data transmission Near-Field Communication (NFC). Contactless payment becomes available after you connected the debit or credit card. When using passive wearable devices, such as, for example, rings, for confirmation of transaction it is necessary to enter the PIN code on the payment terminal by analogy with use of plastic cards. In a case with active, such as smartwatch, payment can be made one contact, having specified the PIN code directly on the device.
2016: NFC payments at peak of a cycle of expectations of Gartner
Cycle of a maturity of technologies of Gartner company this graphic display of penetration, adaptation and social influence of specific technologies. In 2016 NFC payments are at peak of expectations.
Deloitte: 5% of users of phones with NFC will make contactless payments
By estimates of Deloitte, by the end of 2015 of 5% of users of smartphones with NFC at least will make contactless transactions once a month in outlets while in the middle of 2014 such transactions made only 0.5%. According to forecasts of Strategy Analytics, turnover of mobile NFC payments by 2020 will reach $130 billion.
Start of Samsung Pay and Android Pay
The Samsung Pay system in addition to NFC uses MST technology (Magnetic secure transmission) which allows the transferable device to imitate the normal bank card.
Besides, API Google Wallet allowing to create applications which give to the user an opportunity to make mobile payments, and not only using NFC, but also on the Internet is built in the latests version of Android systems.
IDATE: The volume of NFC payments are 4.6 billion euros
The volume of transactions using NFC technology in 2014 is estimated by IDATE company at the level of 4.6 billion euros (data of summer of 2014). In 4 years it will reach the volume of 53.6 billion euros. At the same time annually it is the share of global market of payment transactions to several hundred trillions of dollars. Such serious gap in volumes shows differences between two markets, but also stimulates the market of contactless payments to development.
The market of mobile payment still is in embryo though there is a set of commercial offers and technical capabilities, said in the report of IDATE are rather developed. Nevertheless, the majority of on-line and mobile payments is still made using the debit or credit card, and in shops still pay in cash, the check or the payment card.
IDATE estimates the market of e-commerce at 1.145 billion euros, in this sector in 2014 34.8 billion transactions are made (according to CapGemini). In particular, on a mobile commerce 29 billion transactions are the share 115 billion euros from which 13% are transactions through alternative payment systems of the amount (without participation of bank payment cards).
Besides, in 2014, according to forecasts of IDATE, 278 million mobile phones with NFC technology will be used around the world, and 28 million users probably use NFC for making payments.
As for operators of billing systems, this market, according to the forecast of IDATE, will reach 18 billion euros in the next years. At the same time about 30% of this volume will fall on direct online billing.
MarketsandMarkets: The volume of NFC payments are $4.9 billion
By MarketsandMarkets estimates, in 2014 turnover of contactless payments in the world made about $4.9 billion, and by 2018 will approach $10 billion.
The Apple Pay is started in the USA
Japan plans migration for NFC from own technology of payments
For July, 2012 Japan in which the FeliCa system, close to NFC, developed by Sony company is used treats the countries with the greatest distribution of contactless payment systems. Services under the Osaifu-Keitai brand are included by electronic money, cards of identification and loyalty, journey payment, credit cards and so forth. At the end of 2011 the Japanese mobile operators announced plans of step-by-step migration from Felica technology on NFC.
Juniper Research: In 2017 the volume of NFC payments will exceed $180 billion
According to forecasts of the western analysts, the share of contactless mobile payments till 2016 will remain rather low. According to them, "use of contactless NFC payments involves changes in consumer behavior and requires interaction between all concerned parties - banks, mobile operators, card networks and sellers". All this takes a lot of time therefore, at least, till 2015 analysts do not expect an exit of NFC payments to mass market.
According to forecasts of Juniper Research (2012), in 2017 every fourth user of the mobile phone in the USA and Western Europe will pay goods and services by means of devices with support of NFC. At the end of 2012 not many more than 2% of mobile users of these regions will pay in this way for purchases. In 2017 the volume of the mobile payment transactions executed by means of devices with support of NFC will exceed $180 billion.
Income from NFC will help mobile operators to compensate decrease in an indicator of ARPU, but for this purpose it is necessary to convince of prospects of new technology retail.
According to analysts of Juniper Research, 2011 it was that threshold when the technology "matured" and there was its institutional registration. The consortium Isis which includes leading manufacturers of cell phones and North American telecom operators approved technical standards of use of NFC in mobile phones. Practically all vendors already announced NFC devices, and mobile operators and financial institutions started pilot projects. Interest in new technology is stirred also by start of Google Wallet payment system.
Experts of Juniper are sure that all these factors will lead to emergence of a new segment in the e-commerce market, and in 2012 world turnover of NFC payments will make more than $25 billion, and by 2017 this indicator will exceed $180 billion. North America, Western Europe, the Far East and China will be the most advanced regions, on these countries about 90% of payments is necessary. By 2017 every fourth owner of the mobile phone in the USA and Western Europe will pay goods in shop using NFC, researchers believe.
Nevertheless, future NFC is not so cloudless as it seems. "Brake" of process can appear retailers who are suspicious of new technology and prefer to make investments in services with traditional plastic cards. Their potential partners from the circle of mobile phone manufacturers, mobile operators and banks still should convince retail business to pass to NFC, authors of the report claim. "It is the critical moment for retail payments of NFC. Despite the considerable success achieved for today market potential can be implemented only if all participants of an ecosystem make the corresponding contribution to development of technology", – one of authors of a research Windsor WindsorHolden whose words are cited in the press release comments.
Also it should be noted that though $180 billion – huge digit in absolute expression, it is not a lot of against the background of turnover of all market of e-commerce. Juniper Research predicts that in 2017 it will reach $750 billion. Comparison with a total turnover of the market of retail which in five years will make about $16 trillion looks brighter.
NFC payments at peak of a cycle of expectations of Gartner
On the diagram of 2012 it is visible that NFC payments considerably promoted on a curve. However, according to researchers, NFC payments will need 5-10 more years to reach mainstream level, i.e. on "Plato of productivity" while at the NFC technology on it will leave from two to five years.
Gartner, August, 2012
In the following scenario, "Interaction of the person with technology", Gartner calls NFC the "technology of a turning point" allowing people to interact with the world of technologies in "more natural way".
ABI Research: The volume of NFC payments was $4 billion
ABI Research predicts sharp increase in volume of the payments made by means of mobile phones and technologies of communication of a near range (NFC) for the next years. Though in 2012 it made only 4 billion dollars, in the 2016th the boundary of 100 billion will be overcome, and in 2017 the volume of payments will grow to 191 billion dollars. The impetus to growth will be given by convergence of different payment types — contactless, personal and network — to process which there will be one device with support of NFC. It will cause convergence of a set of the markets, from retail sales and tickets to access control facilities.
The Apple company does not support NFC technology, advancing instead of it own system of mobile payments Passbook. However analysts of ABI believe that she should solve a problem of support of NFC already soon.
The first convergence will include the markets of tickets and transport services, analysts consider. By 2017 for 26% of mobile devices with support of NFC the application for contactless payment of tickets will be installed. Transport companies will be able to offer additional services: a design of a route, the schedule to place advertizing and so on. However, analysts note, business models of convergence are not worked out yet.
Safety of contactless payments
The protected modules SE and HCE
Safety of such transactions is performed by means of the protected module (SE) – the chip, steady against cracking, which provides the protected storage, commission of payment transactions and storage of confidential data. Such chip saves information, manages protection and provides the screen (Firewall) between the NFC applications and other modules.
When using the Host Card Emulation (HCE) technology allowing to emulate the bank card on phone or the tablet, the protected module is virtual and is in a cloud.
HCE has an open architecture that allows to emulate not only bank cards, but also cards of programs of loyalty, transport cards, the admission, etc. The technology allows to accelerate considerably process of implementation of payment NFC services as need for coordination and approval of actions of mobile phone manufacturers disappears, besides, many compatibility issues are solved.
SE and HCE technologies considerably differ, at the same time everyone has both advantages, and shortcomings. HCE allows not only to make payments on physical POS terminals as SE, but also to perform Internet transactions on the websites and in applications, however it is more vulnerable to the malware and is critical to existence of Internet connection.
Thus, the protected module can be built in the following elements:
- the SD card is the memory card which can be inserted into some phones as addition to already available SE/NFC functions;
- the external device – in this case the sticker or the device connected to phone gives the chance to use SE/NFC;
- the built-in device – the module SE/NFC is built already in some phones;
- SIM is adding of the NFC function in the identification module of the subscriber;
- a cloud – program approach which unties the protected element from the device.
2019: The new method of theft of money from Visa proximity cards is detected
Experts in cyber security from Positive Technologies company told in July, 2019 about vulnerability which operation allows malefactors to bypass restriction for write-off of the large amounts with a contactless method from cards of Visa.
Usually proximity cards do not allow to carry out payment of a large sum without PIN code. For example, users in Great Britain need to enter the PIN code upon purchase from £30 (about 2300 rubles). If criminals steal the card and will try to carry out several transactions for large sums, then the bank will block the card.
According to experts from Positive Technologies, there are two methods to bypass this restriction. In the first case they used the device for interception and replacement of messages in a communication channel between the card and the reader device. With its help on the card the false signal about write-off of the amount less than £30, and was sent to the terminal — the message about the verification which is carried out in a different way. This vulnerability mentions only the Visa cards as in other payment systems big transactions are confirmed only by the PIN code.
In the second option researchers used two mobile phones. One phone collected the so-called cryptogram of payment guaranteeing authenticity of future transactions from the card. The second — accepted the cryptogram and imitated the card.
The Visa company is not going to take measures for suppression of these types of fraud. According to the company, for fraud implementation malefactors need to have the card, and it seldom happens. However researchers do not agree that the card needs to be stolen. As showed results of an experiment, it is enough to malefactor to approach for a while it is close to the card of the victim and to consider payment.
2017: The Central Bank told about contactless thefts from payment cards
Experts of FinCERT (FINTSERT) of the Central Bank told in September, 2017 about data of cards which interest malefactors at contactless thefts. It on Thursday, September 28, Rambler News Service with reference to materials of FINTSERT reports.
There are no confirmed data on successful creation in Russia of duplicates of payment cards yet, note in the center. Data on type of the used payment application, card expiration date, a name of the card holder, PAN (Primary Account Number, the main card number), the history of transactions, the number of the remained attempts of input of the PIN code become the purposes of thefts.
Besides, perhaps separate plunder of Track 2 of a magnetic band of the payment card.
Remain the most popular methods of thefts a skimming at which information on the bank card sneaks using the special device, a kind of a skimming — a shimming and Black Box (cracking and installation in ATMs of the malicious software).
2012: The NFC technology is a new era of security risks
On June 28, 2012 the Symantec corporation announced a new type of potential threats. Emergence of new NFC technology which provides wireless data exchange put to the beginning to emergence of new mobile applications on its base which can be potentially dangerous. The Android application.Ecardgrabber is capable to consider number of the plastic card, term of its action and also the bank account number of the user.
The German security researcher released the Android application capable to read out data of a limited number of proximity plastic cards on the radio interface on Play Google service. Proximity plastic cards are usually used for transactions for the amounts less than 10 euros without input of a PIN code – just it is necessary to bring the card to a point on the terminal of sales.
The Android application registrated by Symantec company under the name of Android.Ecardgrabber makes attempt of data reading using the protocol of communication of NFC (engl. Near Field Communication, the standard of short distance communication) — the technology implemented on the newest models of smartphones. The application was placed on Play Google service on June 13, 2012. Before removal from 100 to 500 users managed to download it.
POS terminals with support of NFC
2016: In Russia 235 thousand POS terminals with support of NFC
The popularity of contactless payments in Russia is promoted also by development of infrastructure. According to Gemalto company, the number of POS terminals with support of NFC in our country at the end of 2016 reached 235 thousand, it is approximately the fourth part from all base of devices.
2014: In the world 21.4 million POS terminals with support of NFC are installed
Market development and increase in penetration of contactless payments substantially correlate with available infrastructure. So, by Berg Insight estimates, in 2014 the number of the installed POS terminals with support of NFC in the world increased by 71% and was 21.4 million devices, and by 2019 their quantity will be 75 million that will correspond to annual average rates of a gain in 28.4%. By estimates of J'son & Partners Consulting, in Russia in 2013 the number of POS terminals with support of NFC was 25 thousand units, and at the end of 2014 the number of such terminals increased more than twice.
2011: Deliveries of NFC-ready POS terminals in the world doubled up to 2.5 million pieces
Deliveries of POS terminals of the class NFC-ready in 2011 in the world doubled and reached 2.5 million Softwares to forecasts, raise sales of POS terminals with an indicator of CAGR in the next 5 years at the level of 49.4% thanks to what in their 2017 43.4 million units will be delivered. These indicators correspond to penetration of these devices from 8% in 2011 up to 53% in 2017. The highest rates of penetration are expected in North America (86%) and in Europe (78%), and in other regions - about 38%.
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