Contactless Payment Market size is expected to reach $19.1 billion by 2025 at a CAGR of 12.1% during the forecast period 2020-2025. With the increasing integration of contactless payment technologies in mobile handsets and smartphones, the demand for contactless payment solutions has grown tremendously across all the countries. In addition rising awareness of plastic money and smart cards among the buyers, increasing frequency of purchases and the need for fast transaction time without any inconvenience of standing in long queues is also accelerating the market in the forecast period. The rising hardware encryption on NFC Chips and the integration of contactless payment solutions on EPOS terminal as well as with Subscriber Identity Module (SIM) Cards are set to propel the Contactless payment industry. Moreover an advantage offered by contactless payments for customers that can instantly complete transactions with the tap of a card and the increase in speed of transactions are making contactless payments even more efficient in the forecast period 2020-2025.
Key Takeaways
- Contactless payment in retail sector allows issuers to penetrate the cash payment market, enjoy increased transaction volume, improve customer retention and loyalty.
- Outbreak of corona virus has made Contactless payments a more preferred method of payment as it require less physical interaction.
- Europe dominated the market by a market share of more than 32% in 2019, owing to the high penetration of smartphones and advancements in smart chip technology and integration of mobile app with banks.
- Contactless Payment top 10 companies Google, Amazon, Apple Inc., Gemalto N.V, Giesecke& Devrient Gmbh, Ingenico Group, Verifone Systems, Inc., Wirecard AG, Heartland Payment Systems,Inc., Inside Secure among others.
By Device type- Segment Analysis
Mobile Devices is growing at a highest CAGR of 15.2% in the forecast period. Owing to the growing usage of smartphones all over the globe. In addition personalized experiences, rising penetration of internet, higher speed of contactless transactions will propel the market growth. Moreover several companies are planning to launch contactless payment solutions for smartphones. In 2019, MasterCard has announced to launch solution for smartphones to become contactless acceptance devices. Similarly, in 2019, State bank of India (SBI) has launched contactless mobile payment facility. In addition to this contactless payment services such as Google pay, Samsung pay and so on have been updating their services from time to time. Hence these advantages are analysed to drive the market for Mobile devices in the forecast period 2020-2025.
By Industry Vertical - Segment Analysis
Retail sector is growing at a CAGR of 16.3% in the forecast period. Contactless payment in retail sector allows issuers to penetrate the cash payment market, enjoy increased transaction volume, improved customer retention and loyalty. Moreover with the impact of covid-19 consumers and retailers enjoy the convenience of hands-free payment. In addition, this type of payments are particularly attractive to retail segments where speed and convenience of payments are essential. Furthermore Government of several countries have taken several initiatives to increase the limit of contactless payment apps. In 2020, Barclaycard to enable UK retailers to accept new £45 Contactless Limit. Similarly several other platforms have been increasing the limit as to help prevent the spread of Coronavirus. Hence these advantages are analyzed to drive the market in the forecast period 2020-2025.
By Geography - Segment Analysis
Europe dominated the market by a market share of more than 32% in 2019, owing to the high penetration of smartphones and advancements in smart chip technology. In addition to this increasing adoption rate, regulatory initiatives such as Euro Mastercard Visa (EMV), and the adoption of Near Field communication technology is enhancing the market growth in this region. According to the report given by Master card in more than a dozen European countries, contactless credit card payments account for nearly 50% of transactions. Similarly, According to UK Finance, there were 1.6 billion debit and credit card transactions in the UK. Nearly a third of all card transactions in the UK were made using contactless cards. Moreover, banks are integrating with mobile payment apps in the European region, owing to the increasing adoption of smartphones. For instance, in 2018 Apple has integrated with Monzo to enable contactless payment. Hence these benefits and adoptions are analyzed to drive the market in the forecast period 2020-2025.
Drivers – Contactless Payment Market
- Outbreak of Corona Virus Helps in assisting the market growth
With the outbreak of Corona virus Contactless payments have become a more preferred method of payment as it requires less physical interaction. Digital wallets or other smartphone-based payment interfaces have emerged as potential solutions for payments to prevent virus spread. Moreover current developments in digital payments have encouraged the use of contactless payments amid this pandemic. For instance, in April 2020, Neobank Upgrade (U.S.) launched the new contactless credit card available in digital form that supports Google Pay and Apple Pay mobile wallets. In addition bank authorities and card networks in U.S., Germany, Netherlands, Austria, and Hungary, among other countries have set higher transaction limits than usual for contactless payment methods. In 2020, U.K. Finance Limited has increased the spending limit for contactless card payments from 30 Euros to 45 Euros. So therefore the wide spread of Corona virus will accelerate the growth of the market in the forecast period 2020-2025.
Rising Penetration of Internet
The growth of the contactless payment terminals market will be driven by internet penetration as a strong internet connection is the backbone of this payment method. The number of internet users in 2019 reached more than 4.57 billion, depicting a 7% year-on-year growth rate. Moreover, with increasing digitization and smart cities, people will be more inclined towards contactless payment methods as they offer convenience and quicker checkout time. In addition, smartphone manufacturers are developing contactless payment methods such as Samsung Pay, Apple pay and so on. Moreover with increasing penetration level of the internet, people are adapting themselves to new technology and they are becoming more technology oriented. This boosts the contactless payment market. Applications like Google Pay, Apple Pay, Samsung Pay & many more are driving the market by providing easy to use, one tap money transfer, rewards and lot of other perks. Hence these benefits are analysed to drive the market in the forecast period 2020-2025.
Challenges – Contactless Payment Market
- Lack of Awareness and Trust related to contactless payment
Concerns regarding theft and security have created a lack of trust among the public. The absence of pin facility during the transaction further proliferates this concern. Moreover, contactless cards are accepted at fewer locations as compared to magnetic stripe cards. This has hampered the contactless payments market growth to a prominent extent. Risk of spyware, malware and virus attacks due to usage of numerous systems is limiting the adoption of contactless payment globally. Low awareness of this mode of payment, especially across Asia Pacific and Latin America, is further restricting the contactless payment market growth.
Market Landscape
Technology launches, acquisitions, Partnerships and R&D activities are key strategies adopted by players in the Contactless Payment market. In 2019, the market of Contactless Payment industry outlook has been fragmented by several companies. Contactless Payment top 10 companies Google, Amazon, Apple Inc., Gemalto N.V, Giesecke& Devrient Gmbh, Ingenico Group, Verifone Systems, Inc., Wirecard AG, Heartland Payment Systems,Inc., Inside Secure among others.
Acquisitions/Technology Launches
- In 2020, CPI Card Group Inc., a payment technology company and leading provider of credit, debit and prepaid solutions, highlighted its dual interface metal card solution, which uniquely captures two major trends in consumer payments (metal and contactless.)
- In 2019, Wirecard and Sisal Group signed agreement to collaborate in the field of contactless payment solutions for the brand SisalPay
