Apple Pay and Samsung Pay are driving close to 70 percent of new customers making contactless payments via their mobile phones and near field communications technology, according to a new report from Juniper Research.

The report, Contactless Payments: NFC Handsets, Wearables & Payment Cards 2016–2020, forecasts that the number of NFC mobile payment users will reach 148 million globally this year. With the industry receiving a strong stimulus from Apple Pay and Samsung Pay, Juniper forecasts that NFC payments may be the primary initial driver of the transition to contactless terminals and not EMV, which was previously expected to spur the transition.

“With the advent of EMV in the U.S., it’s critical that retailers enable contactless payments on their POS terminals – it enables far faster throughput at POS than CHIP & PIN,” said Dr. Windsor Holden, principal analyst at Juniper Research.

“At the moment, only a small minority of U.S. cards have contactless capabilities, but Apple Pay and Samsung Pay have the potential to seed contactless usage in the U.S.,” he said.

“Furthermore, when the combination of biometric authentication and credential tokenisation are taking into account, these transactions are more secure than those with a standard CHIP & PIN card.”

Infrastructure in place
Retailers in the United States have been slow to adopt contactless terminals. However, this is starting to change, according to Juniper.

Close to one in five point-of-sale terminals in the U.S. is now contactless, providing enough infrastructure for the market to experience traction, per Juniper.

While the transition to the EMV protocol was expected to spur investment in contactless terminals, it may end up being consumer demand for mobile payments that encourages some retailers to make the transition.

Juniper forecasts that NFC smartphones would be the primary initial driver of contactless payments in the U.S., given the limited number of cards that currently offer the facility.

When Apple Pay launched in China in mid-February, close to 40 million payment cards were registered to the service in 24 hours.

Coupons put on hold
While Apple Pay and Samsung Pay are helping to drive NFC payments, there has been little movement so far to take advantage of NFC’s potential across the entire purchasing cycle.

“Perhaps what’s most surprising is that NFC on the coupons side appears to have been largely put on hold,” Dr. Holden said. “One of the key attractions of NFC was that it could fulfill a role across the retail lifecycle, from product discovery to product purchase, and at the present time the focus is wholly on the latter.

“It may be that stakeholders want to ensure that customers are accustomed to tapping for payment before introducing other elements,” he said.

The research also forecasts that Host Card Emulation – which stores credentials in the cloud and is not dependent on wireless carriers – would be widely adopted by banks and over-the-top players. Per Juniper, HCE has already been deployed by more than 50 financial institutions, including Barclays Bank, in Britain.

Juniper does call into question the prospects for NFC payments based around stickers as they present a significant security risk.

“Retailers need to ensure that their terminals can accept contactless payments,” Dr. Holden said. “In markets such as the UK, Poland, Australia and the Czech Republic, the average POS terminal with contactless capability is already witnessing over 1,500 contactless transactions per annum.

“While we don’t envisage those kind of levels in the US for some time – the low level of contactless cards is a major inhibitor – by facilitating contactless as an option it allows consumers to make the choice about how they pay: contactless or PIN; card or smartphone,” he said.