NFC And HCE 2016 - What’s Next?

Alexander Rensink, Vice Chairman, NFC ForumHCE+Tokenization Summit AmsterdamNovember 25, 2016, Amsterdam

NFC And HCE 2016 - What’s Next?

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The NFC Forum brings the convenience of NFC technology to life. We empower organizations to deliver secure, tap-based interactions with an intuitive, reliable experience to users around the globe.

NFC FORUM MISSION

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THE NFC FORUM REPRESENTSAll of the world’s major:● Chip vendors ● Payment service providers ● Smart phone manufacturers● Mobile operating system providers● 150 member companies

Collaborations with industry consortia:

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NFC AND THE CONNECTED WORLD

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Technology trends creating opportunity for NXP

80% of the world’s economic value will come from connectivity improvements to existing cars, devices, and Internet of Things

Source: Euromonitor; Gartner; ARM Holdings; UBS; Center for Strategic and International Studies; McAfee, NXP analysis, International Telecommunications Union

NFC-enabled mobile device growth & new auto service trends driving NFC market

growth1

Everything connected

Everything smart

Everything secure

1B+ additional consumers online, 50B+ connected

devices

80B+ more devices with intelligence by

2017

Economic impact of cyber-attacks

nearing half-trillion dollars

FUTURE: NFC-CONNECTIVITY EVERYWHERE

NFC-ENABLED WORLDWIDE-RANGING USER EXPERIENCES EVERYWHERE

Access

Connected

Car Connected Home

Smart

Ticketing

Marketing

SmartTransport

HCE harnesses NFC to elevate connectivity across

the connected world

Retail

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LATEST MARKET DEVELOPMENTS

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GLOBAL NFC MARKET GROWTH

Source 1: IHSSource 2: Global Market Insights Source 3: Strategy AnalyticsSource 4: JuniperSource 5: ABI Research

Installed base of NFC enabled handsets of 2.6 billion units by end 2016 and 330+ different models in the marketplace5

2.2 billion NFC-enabled handset shipments by 20201

• NFC adopted across all handset OEMs, covering all OSs

• 72% by 20203, up from 52% in 20163 and 18%1

in 2013• Apple Pay, Samsung Pay, Android Pay, etc.

• Global NFC market to reach US$47B2 by 2024Mobile payments with handsets reached 148 million consumers this year⁴

1

Source: IHS

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NFC SIM AND SECURE EMBEDDED ELEMENT GROWTH CONTINUES

Eurosmart, May, 2016 http://www.eurosmart.com/facts-figures.html

• 570 million units forecasted for 2016 SIM and eSE or 15% growth from previous year

• 9,765 million units forecasted to ship in 2016

• Telecom represents 50% of shipments

• 63% shipment growth for Device Manufacturers

Includes NFC UICC Secure Element, Embedded Secure Element and Embedded UICC

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HCE GROWTH STARTS AND RAMPING FAST

Banks embracing NFC and HCE as a strategy3:

• 55 banks introduced HCE-based services as of Jan. 2016, up from 7 in 2014

• Asia and Europe leading the way with 40+ HCE introductions

• Beyond smartphones, HCE could possibly be supported on other devices such as wearables

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MOBILE PAYMENT OPTIONS AND CHARACTERISTICS

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MOBILE PAYMENT SECURITY MODELS

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HCE IN ACTION

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HCE GROWTH ACROSS NFC-ENABLED EMV TRANSACTIONSToday:● HCE supported by major payment schemes:

Visa, MasterCard, AMEX, Discover, UnionPay, JCB, others

● Banks have rolled out HCE-based payment services Australia, UK, Scandinavia, Russia, Taiwan, Canada and more Royal Bank of Canada HCE wallet integrates over 150 loyalty

programs

● 85% of market share of global smartphone shipment can potentially support HCE1

Android, Windows Phone, and BlackBerry OS

● Visa Pay and Mastercard Masterpass continue to grow HCE offerings Masterpass is accepted at 5 million merchant locations in 77

countries

Source: NFCWorld+

Source 1: IDC

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THE NEXT OPPORTUNITY: NFC-BASED PUBLIC TRANSPORT (ESE + SIM + HCE)● NFC and HCE mobile train ticket purchase trial this fall

in West Yorkshire, UK ● 13 mobile-transit payment services launched or

scheduled to launch this year in US, including Atlanta, Los Angeles, and Washington

● UK Cards Association announces framework for nationwide NFC public transport payment

● Montreal pilots NFC transport payments with 100 employees

● NFC transport payments to pilot three month trial in Adelaide this fall

● Dublin bus and railroad commuters to use NFC to pay for transport

● Activation rates for NXP/Xiaomi NFC mobile transit solution in China grew 15% in Shanghai and over 20% in Shenzhen since services launched in June 2016

HCE App enables ticket purchases on their mobile phoneSource: Euro Transport Magazine

300 million will use contactless ticketing on mobile and wearables by 2021. Source: Juniper Research

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WE WANT YOU TO:

WE WANT YOU:

WE WANT YOU:

BECOME A LEADER IN THE RAPIDLY GROWING NFC INDUSTRY

JOIN THE NFC FORUM!

For more information on how to get involved: http://nfc-forum.org/

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THANK YOU!

Questions?