In 2021, the near field communication (NFC) market was estimated to be worth USD 20,795 million worldwide. It is anticipated to increase at a CAGR of 14.8% over the forecast period (2022–2030) to reach USD 72,017.15 million by 2030.
With the use of a wireless interface and a variety of protocols, NFC, allows electronic devices and communication equipment to establish radio communication with one another while they are in close proximity to one another.
NFC is mostly used in laptops, tablets, and smartphones for short-range data sharing (up to 10 cm or less). NFC is mostly used for marketing and payment applications. However, it is also used in many other applications. These include chip-enabled mobile marketing, ticketing, identification and access, and gaming on NFC-enabled smartphones. The market for near field communication (NFC) is expected to grow rapidly because of a number of factors. These include the rise in smartphone usage and the increasing need for secure data transfer.
Global Market Restraint for Near Field Communication (NFC)
Short Operational Range and Security Concerns – As mentioned above, NFC can only work across short distances, approx. 10 – 20 cm. Its shortened operating range makes it more vulnerable to unintentional or intentional signal interference. Also, two NFC devices may not be able to communicate with one another as a result of the disruptions. These issues are expected to hinder the global near-field communication market’s development. Furthermore, customers may be more prone to security concerns. These include hacking, data corruption, and eavesdropping since NFC allows contactless information transmission.
The range of NFC devices is only a few centimeters, however, an attacker can retrieve useable passwords up to a distance of 1–10 meters depending on the mode of signals. Thus, the risk of data theft and hacking limits this market’s penetration on a global scale.
Opportunities in the Global Near Field Communication (NFC) Market
Increase in Adoption of NFC-Capable Wearable Technology:
NFC-enabled watches, bracelets, fitness trackers, wristbands, and key fobs are growing in popularity all over the world. The benefits that wearable payment devices offer—such as the ability to predict customer demands, boost customer engagement, and improve merchant payment tracking—have significantly expanded the adoption of NFC-enabled wearables. Additionally, it is anticipated that there will be excellent opportunity for market development because of the growing usage of cloud-enabled rings for low-value transactions by end users globally.
Recent Technological Developments in NFC
In the NFC industry, several technological advancements have been achieved. For example, attaching a digital car key to your Apple Watch, iPhone, and Apple Wallet allows you to start and unlock your car wirelessly with the recently launched Apple iOS 14. In large part, its function complements NFC. Furthermore, a large number of industry players are offering imaginative, reasonably priced NFC solutions. It is expected that these developments would open up new avenues for the NFC industry to expand.
Regional Analysis of NFC Technology
North America
North America Dominates the Global Market!
The global near field communication (NFC) market is categorized into 4 regions, namely – Europe, North America, Asia-Pacific, and LAMEA.
North America is the highest shareholder in the global near field communication (NFC) market and is anticipated to grow at a CAGR of 13 % during the forecast period. This area’s environment for NFC is continuously changing. In addition to NFC solutions becoming widely accepted in banking, finance, retail, and healthcare, it is anticipated that the near-field communication market will grow dramatically throughout North America, with the United States and Canada leading the way. North America is also predicted to dominate the market because of the large number of strong competitors as well as the projected high rate of NFC solution development and implementation.
Asia-Pacific
Asia-Pacific is expected to grow at a CAGR of 16.5%, generating USD 24474.5 million during the forecast period. This area is anticipated to experience the fastest growth rate during the forecast period. This is due to the rising NFC technology awareness and acceptance in the retail and transportation sectors. Additionally, the region’s market for near-field communication is expanding due to rising smartphone adoption in nations like China and India. The market is expanding due to regional government initiatives to promote NFC in the banking industry. The Indian Finance Ministry ordered the nation’s banks to provide their clients with credit and debit cards supporting NFC.
Europe
In Europe, the market value of NFC is expanding quickly. The region’s growing use of cutting-edge technologies like artificial intelligence and cloud-based apps drives up demand for NFC. The main factor projected to contribute to the market’s growth in Europe during the forecast period is the proliferation of NFC-enabled payment wearables. The expansion of Europe near field communication market is fueled by merchants’ increasing use of near-field communication systems and the creation of contactless payment apps by various regional banking institutions. Additionally, the arrival of cutting-edge NFC-enabled smartphones in Europe fuels the market’s expansion. For instance, Xiaomi said that the NFC-enabled Mi Band 4 would be released in Europe in June 2020. Initially only available in China, this version will soon be available in Russia and Europe.
Middle East
The Middle East region accounts for a sizeable portion of worldwide spending on near-field communications. However, it is projected that the area would offer the market lucrative growth potential. The LAMEA near-field communication market is expanding due to the region’s ongoing transition toward contactless technologies and the Middle East’s growing use of contactless tap and play technology. In addition, South Africa is a pioneer in using NFC tags and chips in various industries, including mobile banking and credit cards. This element also contributes to the market’s expansion in the area.
Segmental Analysis of NFC Technology
The global near field communication (NFC) market is segmented by product type, operating mode, and end-users.
Product Type
Based on product type, the global near field communication (NFC) market is divided into NFC ICs, SIM cards, NFC tags, NFC readers, and others.
The NFC readers segment, the market’s largest contributor is anticipated to expand at a CAGR of 13.9% throughout the forecast period. The primary factor fueling this market’s expansion is the growing utilization of NFC readers in organizations to enhance client experiences. Businesses may increase productivity and efficiency by streamlining payment options using NFC readers.
Additionally, there is a growing need for NFC ICs. This is as a result of the growth in demand for information security, contactless mobile payments, and information exchange. Furthermore, manufacturers of smartphones are beginning to recognize the benefits of technology. Cellphones are starting to use peer-to-peer NFC technology. For example, in June 2019, Apple Inc. enhanced the NFC functionality with iOS 13.
Operating Mode
According to the operating mode, the global NFC market is divided into 3 categories. These are read/writes mode, peer-to-peer mode, and card emulation mode.
With the largest market share, the NFC readers segment is expected to expand at a 14.5% CAGR over the course of the forecast period. The growth of the reader/writer mode market is driven by the demand for communication between active and passive NFC devices.
The NFC device works similarly to a traditional contactless smart card. The card emulation mode market is expanding as a result of mobile devices’ increased capacity to emulate contactless smart cards through the use of NFC technology. The smartphone may be used as a payment card, loyalty card, access control card, or hotel room card because of this manner of operation.
End Users
Based on end-users, the global near field communication (NFC) market is bifurcated into retail, transportation, automotive, residential and commercial, medical and healthcare, consumer electronics, banking and finance, hospitality, and others.
The consumer electronic segment is the highest contributor to the market and is expected to grow at a CAGR of 13.3% during the forecast period. Due to the widespread commercialization of NFC technology in smartphones, smart TVs, media tablets, set-top boxes, and gaming consoles, the number of NFC applications is increasing in the consumer electronics sector.
Furthermore, the demand for NFC technology among end consumers is fueled by the need for more straightforward handling of consumer devices (like Bluetooth speakers and headsets, projectors, set-top boxes, printers, cameras, TVs, Wi-Fi routers) and appliances (refrigerators, air purifiers, coffee makers, washing machines, and blenders).
The fast adoption of NFC technology across a range of applications, including transactions, access control, and product identification, is the main driver of market expansion in the retail industry. Retailers and brands can now easily, quickly, and reliably do communications with customers at different stages of the customer journey, including pre-purchase, in-store, and post-purchase. Additionally, it is expected that the rise in demand for bettering customer experiences will hasten the implementation of NFC technologies in the retail industry.
Conclusion
In conclusion, growing smartphone usage, expanded applications across several sectors, and technical improvements are all driving significant growth in the near field communication (NFC) industry. Notwithstanding obstacles like security worries and a restricted operational range, the industry is still expanding due to opportunities brought about by NFC-enabled wearable technology, regional initiatives promoting NFC, and the proliferation of NFC-enabled consumer electronics. The market is now dominated by North America, but Asia-Pacific is predicted to develop at a quick rate. This will make the NFC environment advantageous for both consumers and companies. NFC has the potential to completely change the way we connect with technology, transact business, and interact with our surroundings. This is because it develops and becomes more integrated into everyday life.