Contactless payments is a technology that allows customers to purchase goods or services at payment terminals without engaging physical contact with the payment terminal. It uses radio-frequency identification between a payment card, key fob, smartphone or other device and the merchant’s payment terminal. The embedded microchip in contactless cards or devices communicates securely with the card reader through near field communication (NFC) to process contactless payments. This enables fast transactions for small ticket items and provides convenience to customers. Industries like retail, transportation, hospitality, entertainment venues and others are increasingly adopting contactless payments to improve customer experience. Key products in the contactless payments market include contactless payment cards, POS Terminals, contactless mobile payment devices.
The global contactless payments market is estimated to be valued at US$ 10.2 billion in 2023 and is expected to exhibit a CAGR of 18% over the forecast period 2024 to 2030, as highlighted in a new report published by Coherent Market Insights.
Market Dynamics:
The growing demand for secure and fast transactions is expected to drive the contactless payments market. Contactless payments provide several security advantages as it eliminates physical handling of payment cards and makes theft and skimming more difficult. It also provides convenience through quick tap and pay mode of transactions which is boosting its adoption across retail as well as transportation sectors to facilitate mass transit payments. Another major driver fueling the market growth is increasing adoption of contactless payments by merchants. Large retailers, enterprises and merchants are enabling contactless payments at their stores to provide seamless checkout experience and faster transactions. Moreover, proliferation of contactless enabled devices like contactless credit and debit cards as well as wearable payment devices is creating significant opportunities for market players in contactless payments market.
Segment Analysis
The contactless payments market can be segmented into technology, mode of payment and end user. Based on technology, the market is segmented as Contactless Card (NFC/RFID), Wearables, and Mobiles/Digital Wallets. Contactless cards dominate the segment currently, holding over 60% share due to high adoption. However, mobiles/digital wallets segment is expected to witness highest growth during the forecast period owing to shift in preference towards mobile-based contactless payments.
PEST Analysis
Political: Governments across the globe are implementing various initiatives and regulations to promote digital and contactless payments. This is encouraging market growth. For instance, European Union has mandated contactless limit to be raised across all member countries.
Economic: Growing e-commerce sector and cashless economies are driving more users towards contactless payments. It offers advantages like speed, convenience and security over cash transactions.
Social: Younger demographics are comfortable adopting new-age payment modes and driving higher usage of contactless payments. Also, need to reduce physical contact amid COVID pandemic has boosted market growth.
Technological: Continuous innovation in mobile wallet technologies, beacons, and near field communication is facilitating seamless and secure contactless transactions. Advances like tokenized payments and biometrics are further fueling the market.
Key Takeaways
The Global Contactless Payments Market Growth is expected to witness high.
Regionally, Asia Pacific region dominates currently attributed to large population, growing digital payments market and strong government support. China accounts for over 50% share currently due to widespread adoption of mobile payments. Europe is also an important mature market and regions like Nordics have almost fully transformed into cashless economies.
Key players operating in the contactless payments market are Visa, Mastercard, American Express, PayPal Holdings, Barclays, Apple, CAIXA Bank, Wirecard, Gemalto, Giesecke & Devrient, Heartland Payment Systems, Ingenico Group and Inside Secure.
Major players are focusing on strategic partnerships, product innovations and mergers & acquisitions to strengthen their market presence. They are investing heavily in developing advanced payment technologies, solutions and services to tap opportunities in emerging regions.
*Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it
