NEW YORK (TheStreet) -- A new report predicts shopping transactions using new NFC (Near Field Communication) "contactless payment" services such as Apple (AAPL - Get Report) Pay will rise from an expected 101 million this year to 516 million uses by the end of the decade.
Analysts from Jupiter Research determined that the introduction of Apple's payment mechanism will stimulate the wider marketplace and help to address the key challenges of contactless awareness and acceptance.
Researchers observed that NFC solutions utilizing a rival system called HCE (Host Card Emulation) were steadily gaining traction within the banking sector. They said that several, including BBVA and Bankinter in Spain and CUA in Australia, had already launched commercial services, with pilot schemes in operation in countries such as Russia and New Zealand.
Although the Apple Pay has encountered some resistance in this country from retailers such as CVS Health (CVS - Get Report) , Rite-Aid (RAD - Get Report) and WalMart (WMT - Get Report) Apple CEO Tim Cook said his company's new mobile payment service is an instant success. At a Wall Street Journal conference last night, Cook announced that the Apple Pay system has handled more than 1 million card activations in its first three days of operation, more than all the other mobile wallets including Google Wallet, combined. Cook also talked about how he would be open to working with Alibaba's (BABA) and AliPay, with Alibaba Chairman Jack Ma saying separately that he has tremendous respect for Cook and hopes "we can do something together."
Apple Pay allows users to complete transactions by holding their iPhones near a merchant's contactless reader while their finger presses the phone's Touch ID button. Apple has said users don't have to open an app or even look at their screens, having noted that "[a] subtle vibration and beep let you know your payment information was successfully sent."
The Apple Pay feature is currently available on the new iPhone 6 and 6 Plus models as well as the iPad models (though it's only for online shopping), and will also be included in the upcoming Apple Watch expected early in 2015.
Apple shares were gaining 0.39% to $105.52 in premarket trading in New York.
The report also points out that not everyone will share in the new contactless payment boom. Researchers believe the latest developments threaten the success of NFC for MNOs (Mobile Network Operators). "With Apple Pay, the secure element is embedded on the handset and controlled by Apple; with HCE, the SE (secure element) no longer has to be physically present in the handset, again removing the requirement for MNO involvement," Juniper said in the study.
By the end of the decade, the research firm predicts three-quarters of all smartphones worldwide will contain an NFC controller chip. However, not everyone is going to be enthralled by it, thus potentially holding back the success of mobile payments.
"We would envisage that while NFC deployments and consumer activity will be buoyed by these developments, the opportunities for network operator involvement are limited," said the report's chief author, Dr. Windsor Holden. "Hence we are likely to see more operators re-evaluating their existing commitments to NFC and possibly withdrawing from the space."Read More: Starbucks' Pumpkin Spice Frappuccino and 14 More Fatty Drinks It Makes -- Written by Gary Krakow in New York.
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