ABI Research, NFC Forum Study Sees Uptick in Contactless Technology

By Claire Swedberg

Although many survey respondents were unfamiliar with the term 'NFC,' a large percentage indicated they use the technology for payments nearly every day, and that the experience is mostly positive, paving the way for more applications.

Whether or not consumers are familiar with the term "NFC" (short for Near Field Communication), almost half of those queried in a new  ABI Research global survey are using the technology on a nearly daily basis. Most employ NFC—a 13.56 MHz RFID technology compliant with the ISO 14443 standard—for mobile payments, though other use cases include contactless access to transportation and prompting the pairing of devices with headsets. ABI Research conducted its survey in the spring of this year for the  NFC Forum, a non-profit technology association, then released the results last month.

According to the study, titled "Consumer Attitudes, Experiences and Understanding of NFC Technology," 44 percent of the more than 2,000 people surveyed said they used contactless cards or mobile payment wallets daily or nearly daily, while 82 percent indicated they had two or more NFC-based contactless payment cards stored in their digital wallets. Of those who have used NFC-enabled payments systems, 88 percent said their user experience was consistently positive, with 70 percent reporting that they were confident or very confident that the transactions were secure.

ABI Research's Andrew Zignani

The four-week research survey was conducted at the request of the NFC Forum this past April. The NFC Forum's objective, says Mike McCamon, the forum's executive director, was to better understand how the technology is being used since NFC readers have been built into billions of smartphones. The NFC Forum wanted the survey to "increase our understanding of consumer adoption, familiarity and experiences with Near Field Communication," both at a global and regional levels.

While the survey took place during the onset of the COVID-19 pandemic, respondents were urged to focus their responses based on their views about and use of the technology before the outbreak began, says Andrew Zignani, ABI Research's principal analyst for wireless connectivity. The NFC Forum requested the study to gain a greater understanding of how familiar consumers are with the technology, as well as the quality of their experience. Of the respondents, approximately 500 were from the United States, while 500 were from China and the rest were from Japan, South Korea, the United Kingdom, Spain, France, Germany and Italy.

The respondents were further categorized by age, ranging from 18 years old to more than 75. Only those who had some familiarity with contactless payments or mobile wallets were included in the survey. The study found that most consumers, once exposed to contactless payments systems, used them frequently and demonstrated high levels of acceptance and confidence. Among those who use contactless payments, the United Kingdom ranked the highest with 47 percent of respondents indicating they do so daily or nearly every day, followed by China and France at 46 percent each.

However, researchers found that while users reported good experience, confidence and familiarity with the technology, there is room for better education regarding the nature of NFC solutions and the variety of ways in which they are being used beyond contactless payments. In fact, the survey found that respondents were more familiar with brand names such as  Apple Pay, Google Pay and  Samsung Pay than they were with the term "NFC."

Of those who indicated they were using NFC for purposes other than payments, about half had employed the technology for reading a tag on a consumer product (to learn more or access a coupon, for instance), or for access control or public transportation. The technology is also being used for tap-to-connect applications, wireless charging and keyless car entry, the study revealed. This is the first survey of its kind conducted by ABI Research for the NFC Forum, though Zignani says, "We've been seeing a lot of traction for RFID and NFC across a number of different areas, and I think our goal was to better understand consumer adoption, familiarity and user experience as well."

The initial question was "Which of the following contactless/tap-to-pay card or mobile payment wallet solutions do you use?" Those who have never made contactless payments were then removed from the survey. Many of the early questions centered around payment wallets, while others explored the experiences people have with the technology and whether or not they have used it beyond making payments. Some questions focused on users' perceptions of the technology's security. The percentage who said they were familiar with NFC was surprisingly high, Zignani says. For instance, 82 percent were at least somewhat familiar, 19 percent indicated they were very familiar, and about one-fifth were still not familiar with the technology despite using it regularly.

Throughout the years, ABI Research has seen a number of potential use cases involving contactless ticketing. As the price of NFC tags has fallen, Zignani says, the tags are increasingly being applied to or built into consumer products for the purpose of thwarting counterfeits. In that way, consumers could confirm a product's authenticity by tapping their smartphone on the item's label. NFC-based connected products are also linking consumers to brand or product content via the tap of a phone.

In fact, Zignani says, "Use cases have opened up massively once it was in the cell phone." The ubiquity of NFC readers in smartphones, including Apple's newly added tag-reading functionality in its products, has been key to the technology's growth. Apple Clips, also employing NFC, provide new use cases for systems requiring accessibility to data without individuals having to download and install a full app.

Another NFC driver has been tag cost. "We're seeing it scaling up as the price of tags is falling," Zignani says. ABI Research has found that tags are now priced at $0.05 per tag or less in high volumes.  Talkin' Things, for instance, recently announced UHF, NFC and HF RFID tags priced at between 3 and 4 cents apiece, for use with fast-moving consumer goods, food and pharmaceutical packaging (see  RFID Tag Costs Drop to About 3 Cents with Talkin' Things Products).

During the COVID-19 crisis, Zignani predicts adoption may increase. "There's been an understandable uptick in contactless technology since the COVID-19 outbreak," he says. In the meantime, the ABI Research survey provides what it calls a baseline before the pandemic. One indication of the rising deployment of NFC during the outbreak has been the adoption of more contactless payments. In October, Visa reported that it had processed 500 million additional contactless transaction in 29 countries across Europe in response to the pandemic, and that 75 percent of all in-store Visa payments are now contactless across that continent.

In healthcare, NFC-based labels and packaging are increasingly being deployed to provide product information to consumers so they can learn about a particular medication and how to use it. Tamperproof NFC tags can identify if a product may have been opened, while some self-testing kits include NFC assistance, meaning patients can tap their phone against a label and follow step-by-step instructions on the kit's use. It can also provide access to test results.

In fact, some COVID-19 testing kits are starting to leverage NFC as well. For example,  Smartrac, an  Avery Dennison company, released a digital verification solution that authenticates coronavirus testing kits and personal protective equipment (PPE) with the tap of an NFC-enabled smartphone, employing  SUKU's blockchain application.

ABI Research also sees use cases such as contactless menus at restaurants using either QR codes or NFC to help diners place orders. "If you can make that retail experience a little better for people," Zignani says, "they are more likely to come in." In the meantime, the survey found consumers already have some familiarity with NFC with regard to public transport and pairing headsets. "I was quite surprised to see that," he states. "There's a long way to go, but there's so much potential there."

The survey found that the majority of respondents were comfortable with the inherent security of close-proximity transactions. Hybrid solutions using Bluetooth and UWB are another trend, according to Zignani, as smartphones provide functionality across multiple wireless technologies. "Obviously, NFC will play a role in that," he predicts, and the development of such hybrid solutions will open up innovative use cases. "I think it's quite exciting."

Going forward, McCamon says, "We are working with our community to increase user awareness of a 'contactless lifestyle' and how it simplifies their life while increasing their safety." The organization's membership is working to expand the adoption of NFC beyond payments to other use cases, he adds, such as identity, transportation, automotive and the IoT.