Chip Makers: Tens of Millions of NFC Phones Expected in 2011

Major NFC chip makers predict 40 million to 50 million NFC phones or more will be on the market by the end of 2011, along with a smaller number of NFC bridge devices.

In interviews carried out by NFC Times, representatives of NXP Semiconductors and Inside Contactless say they have seen enough orders or indications of future orders from phone makers to confidently forecast the end of the drought of NFC devices by 2011, especially during the second half of the year.

Jeff Miles, director of mobile transactions worldwide for NXP, told NFC Times that more and more handset makers have made the decision that "this is a technology they are going support." These handset makers have either ordered chips or are in the process of doing so.

"It’s full (NFC) implementation with different suppliers," he said. "We feel (there will be) 50 million-plus (phones) next year, from every indication."

The projection is for phones using chips from all NFC suppliers, and it is in addition to such NFC bridge or alternative devices as contactless microSD cards and SIMs or SIM overlays with flexible antennas. These bridge devices will not be as numerous as NFC phones, Miles said.

Rémy de Tonnac, CEO of Inside Contactless, also estimated NFC bridge devices would be eclipsed by full NFC phones, accounting only for about 25% of shipments of NFC chips for next year. Of his projected total of 50 million NFC devices on the market in 2011 from all chip suppliers, three-quarters would be full NFC phones, de Tonnac said.

The definition of bridge devices would also include NFC stickers that can interact with phones via a Bluetooth connection, but not passive stickers, said Charles Walton, Inside’s executive vice president and chief marketing officer. He predicted most of the phones would hit the market during the second half of 2011.

"I think we’ll start to see devices that will come probably sooner than mid-year (and) then start to ramp up with bigger volume," Walton told NFC Times.

He compared 2011 for NFC phones to 2005 for contactless banking cards. That was the year banks began rolling out the cards in the United States. “This is what we’re going to see here. This is really year one (for NFC) in 2011."

NXP’s Miles said there might be a couple of NFC phones on the market before the end of 2010. That’s in addition to the Nokia C7 smartphone, which began shipping last week with an NFC chip inside. The Symbian phone requires a software upgrade for the NFC applications to work, however. And the phone doesn’t support card emulation, that is, the phone cannot act like a contactless card.

The chip makers declined to say which handset makers have ordered or expressed strong interest in their chips. But as NFC Times has reported in the past, such global phone makers as Nokia, Samsung, LG, HTC, Research in Motion and Motorola are expected to incorporate NFC in one or more models by next year, with mobile operators and service providers especially interested in smartphones. Some of the models will support Google’s Android operating system or perhaps Windows.

Apple is also working with the technology and anticipation is again running high that it will adopt NFC for the iPhone 5 due out next year. Cupertino disappointed NFC industry backers last year when the iPhone 4 did not pack NFC.

While the Nokia C7 does not support card emulation, at least not without special orders from big operators, many of the other NFC phones are expected to offer this feature.

Demand Growing for Embedded
That would require them to support at least one secure chip, known as a secure element, such as those found on SIM cards or chips embedded in the phone itself. These tamper-resistant smart card chips provide a safe place to store secure applications, including encryption keys.

NXP, Inside and a third NFC chip supplier, STMicroelectronics, all say they are seeing increased demand for NFC chips that can support embedded secure elements. The embedded chips could take the place of SIM cards on NFC phones to store payment or other secure applications. The SIM-based NFC phones would also have to support the single-wire protocol, or SWP, connection to the NFC chip.  

But the same phone might support multiple secure elements, perhaps both an embedded chip and support for the SWP standard. Or it could also support a secure element in a microSD card.

To satisfy the demand for embedded secure elements, NXP has come out with a new NFC chip, the PN65, which is bundled or stacked with its secure element. Inside also is expected to introduce an NFC chip stacked with a secure element. And ST is likely to do the same. The three chip makers already have NFC chips that support the single-wire protocol. NXP also has said its SWP chip, the PN544, can connect to a separate secure embedded chip or one in a microSD card.

In years past, the SIM had been considered the de facto secure element for NFC phones, and this option is still strongly backed by the large telco trade group, the GSM Association.

Unlike the SIM, when the secure element is embedded in the handset, it will not always be clear which party controls it. In such markets as the United States, where mobile operators keep tight control over phones, the carriers would also control the embedded secure chip. But in other markets, it could be service providers, handset makers or even platform suppliers, such as Google with Android, that control the embedded chips.

And the party that controls the secure chip will probably control the revenue from NFC, say observers. 

But payment and ticketing applications, which would be stored on the secure elements, will not be the only services offered on NFC phones, points out NXP’s Miles. Applications that use NFC’s tag-reading capability will also be popular, he said. One example would be location-based marketing.

And as the base of handsets grows, more and more third-party developers will become interested in including NFC features in their smartphone applications, he predicted.

"To me, you get 10 to 20 to 30 to 50 million phones, in a given market you’ve got enough critical mass for some of these guys to start to say: 'I can built something around that.' "

HEADLINE NEWS

Belgian Domestic Debit Network Seeks to Expand Use of Mobile Payments, Though Consumer Habits Hard to Break

Dec 1 2017

NFC TIMES Exclusive Insight – Belgium’s domestic debit network Bancontact is offering both QR code and NFC-based mobile payments services with 20 banks in the country, as backers seek to expand use by consumers of mobile and contactless payments, which each make up only around 1% of total Bancontact transactions.

Korean and Taiwanese Banks Test Loyalty Points Exchange Using Blockchain

NFC TIMES Exclusive Insight – KEB Hana Bank of South Korea and Taishin International Bank of Taiwan have demonstrated the transfer of bonus points and purchase of coupons using Blockchain technology, with KEB Hana Bank planning to launch initial service for visitors to the Winter Olympics next February in Pyeongchang, South Korea.

Norwegian Banks Move to Defend Against Global Tech Giants by Uniting Payments Services

NFC TIMES Exclusive Insight –  The “Pays” wallets, such as Apple Pay and Android Pay, have not yet launched in Norway, but Norwegian banks are not waiting for tech giants Apple and Google or other outside behemoths, such as Facebook, to try to gain a foothold.

Shared and Limited-Use Tokens and Other Changes: Tokenization 2.0 Explained

NFC TIMES Exclusive Insight – The second version of EMVCo’s payment tokenization technical framework adds two new token use cases aimed primarily for e-commerce and in-app payments, along with a few new assurance and authentication features, but much of the focus of the version 2.0 has been on restructuring and clarifying issues from the first version of the tokenization framework released more than three years ago, according to EMVCo in a webinar.

First Data Expected to Begin Tokenizing Mastercard-Branded Cards Next Year; Visa More Restrictive

NFC TIMES Exclusive –  Big U.S. acquirer and processor First Data plans to generate its own tokens for Mastercard-branded card accounts next year, NFC Times has learned, and a source says First Data is also in discussions with Visa to do the same, but Visa may not allow the processor to tokenize Visa-branded cards in place of the network’s own Visa Token Service.

Visa Launches Program to Promote Contactless Transit Payments

NFC TIMES Exclusive Insight – Visa has formed a unit to promote use of Visa-branded contactless cards and accounts on NFC phones and other devices, seeing an opportunity to expand on the success of open-loop fare collection in London and plans for the move by transit authorities in a growing number of cities, including New York, to accept contactless credit, debit and prepaid bank cards for fares.

USA Technologies Seeks to Bolster Services, Markets with Acquisition of Cantaloupe Systems

NFC TIMES Exclusive Insight – Unattended point-of-sale vendor USA Technologies expects to close its $85 million deal to acquire competitor Cantaloupe Systems next week, telling NFC Times the deal will add to USAT’s suite of services and expand its international reach.

Orange Cash Gets New Life as Part of Orange Bank App

NFC TIMES Exclusive Insight – As expected, Orange will continue offering its NFC-enabled Orange Cash Visa-branded card with the launch of its Orange Bank mobile service.

First HCE-Enabled JCB Cards to Hit Market in Taiwan in First Quarter

Nov 14 2017

NFC TIMES Exclusive Insight – Japanese credit card company JCB will participate early next year in a mobile wallet from the Taiwan Mobile Payment banking joint venture, marking the first time JCB will support host card emulation in a mobile payments service.

Canadians Take to Contactless Cards, but NFC Wallets? Not So Much

NFC TIMES Exclusive Insight – While a well-developed contactless card and POS terminal infrastructure and strong consumer take-up of contactless card payments has often been touted as the gateway to use of mobile payments, that is often not the case. Take Canada, for instance.

New York Approves Delayed Contract for Contactless Fare Collection, Clearing Way for Rides with NFC Wallets

NFC TIMES Exclusive Insight – The New York Metropolitan Transportation Authority board has approved a long-anticipated contract to enable riders to pay with contactless credit and debit cards, including cards loaded into NFC mobile wallets, by 2019–the largest transit authority to do so since Transport for London launched open-loop fare collection in late 2012.

Fitbit Chief Plans to Enable Entire Product Line for Payments with NFC; Challenges Lie Ahead

NFC TIMES Exclusive Insight – LAS VEGAS:  Fitbit CEO James Park today said the large wearables maker plans to enable contactless payments across its entire range of devices over the next few years using NFC technology, a move he said he hopes will help make contactless payments “ubiquitous around the world.”