Near Field Communication (NFC) Market

Market Overview

The global near field communication (NFC) market size was valued at USD 20,795 million in 2021. It is projected to reach USD 72,017.15 million by 2030, growing at a CAGR of 14.8% during the forecast period (2022–2030).

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 with each other under proximity.

Near-field communication technology is mainly employed in smartphones, laptops, and tablets (up to 10cm or less) for short-range data exchange. Although many additional applications embrace NFC, including those for medical devices and ticketing, it is mainly utilized for marketing and payment applications. Additionally, a wide range of applications includes chip-enabled mobile marketing, ticketing, identity and access, and gaming use of NFC-enabled mobile phones. The near field communication (NFC) market is anticipated to develop significantly due to several factors, including the surge in smartphone use and the growing requirement for secure data transport.

Market Dynamics

Global Near Field Communication (NFC) Market Drivers

Growth in Need for Convenient Transfer and Security of Data

By enabling quick and secure sharing of files, documents, and sensitive information, NFC improves cooperation in work settings. NFC is significantly better and faster than rival technologies like Bluetooth, which require a few seconds to create the same connection because it takes about 100 milliseconds to do so. When making a purchase, the customer's credit card information is saved on the mobile device in a secure element. This element can be a Subscriber Identity Module, protected chips, or a secure digital card. It is one of the most secure payments because hardware encryption is present and can only be used near the point of sale.

Rising Proliferation of Smartphones

Nowadays, consumers' lives are significantly impacted by smartphones. Consumers use their smartphones to make payments more quickly and easily in addition to conventional forms of communication. Since NFC combines a consumer's mobile device with their wallet, it offers a convenient payment method. This allows the user to conduct mobile transactions and digital exchange material efficiently and link their device to other devices by touch. As a result, there is growth in the number of smartphones supporting NFC technology. For instance, Paytm, the digital payments business, stated that with its "Paytm Smart POS" for Android phones, merchants would be able to take near-field communication (NFC)-based credit and debit card payments using smartphones.

Global Near Field Communication (NFC) Market Restraint

Short Operational Range and Security Concerns

NFC can only communicate across short distances, such as 10 to 20 cm. Due to its reduced working range, it is more susceptible to accidental or deliberate signal interferences. Additionally, the interruptions may prevent two NFC devices from communicating with one another. The development of the worldwide near-field communication market is anticipated to be hampered by these factors. Additionally, because NFC enables contactless information transfer, consumers may be vulnerable to security risks like hacking, data corruption, and eavesdropping. Although the range of NFC devices is only a few centimeters, depending on the mode of signals, an attacker can retrieve useable passwords up to a distance of 1–10 meters. Thus, the risk of data theft and hacking limits this market's penetration on a global scale.

Global Near Field Communication (NFC) Market Opportunities

Upsurge in Adoption of NFC-Enabled Wearable Technology

Around the world, NFC-enabled rings, smartwatches, bracelets, fitness trackers, wristbands, and key fobs are becoming more and more popular. The use of NFC-enabled wearable devices has been considerably increased by the advantages that wearable payment devices provide, including the capacity to anticipate consumer needs, improve customer engagement, and enhance merchant payment tracking. Additionally, the increased use of cloud-enabled rings for low-value transactions by end users worldwide is anticipated to create good potential for market expansion.

Recent Technological Advancements in NFC

Numerous technological developments have been made in the NFC industry. For instance, the recently released Apple iOS 14 enables users to wirelessly start and unlock cars by adding a digital car key to their Apple Watch, iPhone, and Apple Wallet. In large part, its function complements NFC. Additionally, many market participants are providing creative, affordable NFC solutions. These advancements are anticipated to create new opportunities for NFC market growth.

Regional Analysis

North America Dominates the Global Market

The global near field communication (NFC) market is bifurcated into four regions, namely North America, Europe, Asia-Pacific, and LAMEA

North America is the most significant shareholder in the global near field communication (NFC) market and is expected to grow at a CAGR of 13.00% during the forecast period. This region's environment for near-field communications is constantly changing. Along with the widespread acceptance of NFC solutions in retail, healthcare, banking, and finance, it is projected that the near-field communication industry will expand significantly across North America, especially in the United States and Canada. Due to numerous significant competitors and the expected high level of adoption and development of NFC solutions, North America is also anticipated to lead the market. Identiv's Dry Inlay (25 mm diameter), which uses NXP's near field communication IC NTAG 210, has been released at a cheaper cost. The market in North America is expected to benefit from various growth prospects brought on by such advancements.

Asia-Pacific is expected to grow at a CAGR of 16.5%, generating USD 24474.5 million during the forecast period. Asia-Pacific is anticipated to experience the fastest growth rate during the projected period due to 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. Further, a substantial portion of the market expansion in the area is being driven by the increase in demand for mobile payments and NFC wireless applications. 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 near-field communication (NFC).

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.

The Middle East region accounts for a sizeable portion of worldwide spending on near-field communications, but 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

The global near field communication (NFC) market is segmented by product type, operating mode, and end-users.

Based on product type, the global near field communication (NFC) market is bifurcated into NFC tags, NFC ICs, SIM cards, NFC readers, and others.

The NFC readers segment is the highest contributor to the market and is expected to grow at a CAGR of 13.9% during the forecast period. NFC transactions require the active participation of NFC readers. They can communicate between devices, read and write cards and tags, and work with NFC phones. Additionally, an NFC reader is the finest for network authentication, e-transactions, toll road fare collecting, secure access control e-payment, and e-ticketing for events and mass transit. The growth of this market is primarily driven by the increase in the use of NFC readers to improve customer experiences in businesses. Businesses may streamline payment alternatives with NFC readers to boost productivity and efficiency. For instance, by making payments more straightforward, companies may concentrate on other crucial tasks supporting their success and expansion, like marketing or employee development.

NFC chips and ICs generate a short-range radio signal to safely transmit sensitive financial and authentication data. Smartphones are using it for mobile payments. Additionally, it is utilized for user authentication when a person enters a secure facility in an enterprise or passes a scanner on public transportation. Demand for NFC ICs is rising due to increased demand for contactless mobile payments, information exchange, and information security. Additionally, smartphone makers are starting to understand the advantages of technology. Peer-to-peer NFC technology has so begun to be implemented in cellphones. For instance, Apple Inc. increased the NFC functionality in June 2019 with iOS 13.

Based on operating mode, the global near field communication (NFC) market is bifurcated into read/ write mode, peer-to-peer mode, and card emulation mode.

The NFC readers segment owns the highest market share and is expected to grow at a CAGR of 14.5% during the forecast period. In reader/writer mode, a passive NFC tag or inlay and an active NFC reader or smartphone communicate in one direction. The NFC device serves as the interrogator by energizing the passive NFC device and creating a magnetic field while in reader/writer mode (active). Using the magnetic field from the scanner, the passive device, which is a tag or inlay, reacts with its stored information. Therefore, the demand for communication between active and passive NFC devices drives the reader/writer mode market's expansion.

The NFC device is in card emulation mode to passive communication mode. As a result, the gadget functions like a conventional contactless smart card. The expansion of a mobile device's ability to emulate a contactless smart card using NFC technology fuels the growth of the card emulation mode market. Due to this mode of operation, the smartphone functions as a payment card, loyalty card, access control card, or hotel room card. Additionally, there is good potential for the segment's growth due to the increased need to meet the demand surge to facilitate more seamless cashless transactions.

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. The consumer electronics industry involves manufacturing, distributing, and selling communications and entertainment devices such as digital and video cameras, stereos, MP3 players, phones, gaming consoles, wearables, and televisions. 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. Additionally, the demand for NFC technology among end consumers is fueled by the desire for more straightforward handling of consumer devices and appliances. NFC is quickly becoming a part of consumer goods, including Bluetooth speakers and headsets, projectors, set-top boxes, printers, cameras, TVs, Wi-Fi routers, and a range of home appliances like refrigerators, air purifiers, coffee makers, washing machines, and blenders.

In order to supply goods to clients, the retail industry includes department and variety stores, franchise stores, hypermarkets and supermarkets, specialized stores, and convenience stores. The market is expanding in the retail sector primarily because of the rapid uptake of NFC technology in various applications, including access control, product identification, and transactions. Retailers and brands can now simply, swiftly, and reliably communicate with customers at different stages of the customer journey, including pre-purchase, in-store, and post-purchase. Additionally, it is anticipated that the increased demand for bettering customer experiences will hasten the implementation of NFC technologies in the retail industry. Customers at the retail shop can interact with an e-commerce-like platform through their smartphones without the need for an app, thanks to the usage of cutting-edge NFC technology by Smartrac embedded in Smart Retail Label (SRL) tags connected to consumer products.

Recent Developments

• July 2022- Indentive Infineon introduced NAC1080: Single-chip solution with an integrated H-Bridge for passive NFC lock applications.
• September 2022- The launch of Broadcom Ships Trident 4C, the Industry’s Highest Performance Security Switch.