Tuesday, June 28, 2011

How Long Before NFC Payments are Used by 10% to 20% of Consumers?

Consumer adoption of new technologies often can take a while, even when the application or product is deemed to have clear value. It might take an application, service or device to reach 10 percent penetration of U.S. households, for example.

There are some caveats. Not every innovation succeeds. But a Wall Street Journal illustration of past adoption rates for new and popular consumer electronics products shows how long mass adoption can take, even if rates of adoption for newer products and technologies have grown significantly shorter than in the past. 

A panel I was recently on was asked how long it might take for near field communications technology to be adopted by a significant number of U.S. consumers. My response, based on past work studying consumer electronics adoption rates, was that it can take quite a significant amount of time, between three and 10 years, to reach the crucial 10-percent-of-homes threshold, which seems to be the point at which any innovation really begins to accelerate, in terms of adoption.



Also, the more complicated the ecosystem, the longer it will take. Apple iPhones and iPads did not take long to reach the 10-percent penetration mark, because they operate in a fully-developed ecosystem where all that is required is purchase of a product, to obtain the value.

Mobile payments will likely take longer, as will NFC adoption, because lots of other things must be done, on the business infrastructure level, before 10 percent of U.S. consumers will easily be able to use NFC, on a large scale.

We often hear that it will be year X when some percentage of phones shipped will include NFC capabilities, or year Y when X percent of phones in use will have NFC. That's an important metric, but only one metric among many that has to be substantial before NFC-based payments are ubiquitous enough, valuable enough and easy enough to use. It isn't as though the credit card and debit card payment system is broken.

Despite the legitimate excitement, it might take some time before NFC-based mobile payments are a widely-used payment mechanism in the U.S. market.

No comments:

Many Winners and Losers from Generative AI

Perhaps there is no contradiction between low historical total factor annual productivity gains and high expected generative artificial inte...