by Contactless payments, also known as tap-and-go payments, allow customers to purchase goods or services and pay for public transportation by holding their contactless payment cards or mobile wallets over a card reader without swiping or inserting their cards. Traditionally, contactless cards contained embedded RFID chips which communicated with payment terminals using Near-Field Communication (NFC) technology within a short range. However, with advancement in technology major payment providers like Apple Pay, Google Pay and Samsung Pay now allow customers to store their physical credit or debit cards digitally and pay at merchant POS by tapping their smartphones.
The convenience and speed of contactless payments compared to traditional payment methods have gained widespread popularity among consumers. Cards and digital wallets that support contactless payments have simplified the payment experience for small ticket purchases like groceries, coffee, transportation fares and more. With contactless, there is no need to open an app, enter PIN or swipe a card which saves time at checkouts and turnstiles. Additionally, the short-range NFC communication provides an added layer of security as payment details are not physically exchanged. Capability to pay on-the-go without cash has become an essential need for daily transactions and helps merchant process customers quicker.
The global Contactless Payments Market is estimated to be valued at US$ 10.32 trillion 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 key trends:
One of the key trends driving growth in the contactless payments market is the rapid shift towards digital and cashless payments fueled by better infrastructure and connectivity. Governments across developed and emerging nations are promoting digital wallet usage and cashless transactions to reduce cash handling and advance towards transparent financial systems. Major economies like UK, Canada, France, India etc. have significantly increased contactless transaction limits to further push adoption beyond transit systems. Additionally, covid-19 pandemic has accelerated this shift as customers prefer touch-free payments for safety and hygiene reasons. With growing digitalization, payment providers are also advancing tokenization standards to provide higher security for in-app and online payments. Emergence of wearables, beacons and digital keys with embedded payment capabilities will disrupt the market and support omnichannel payments.
Porter’s Analysis
Threat of new entrants: Low capital requirements and growing industry attracts new players but established players have strong brand recognition and distribution networks.
Bargaining power of buyers: Buyers have high bargaining power due to availability of various payment options but contactless payments provide added convenience.
Bargaining power of suppliers: Technology providers have moderate bargaining power due to scale and switching costs for payment platforms and cards.
Threat of new substitutes: Emerging technologies like biometrics, mobile wallets and digital currencies pose threat but contactless works seamlessly across payment terminals.
Competitive rivalry: Intense competition among payment giants and new fintech entrants to expand market share through strategic partnerships and value-added services.
Key Takeaways
The Global Contactless Payments Market Demand is expected to witness high growth.
North America dominates the contactless payments market currently due to high credit card penetration and supportive policies for EMV technology in countries like US and Canada. However, Asia Pacific is expected to grow at the fastest pace during the forecast period with China and India emerging as major markets.
Key players operating in the contactless payments market include Gemalto, Giesecke & Devrient, Heartland Payment Systems, Ingenico Group and Verifone Systems. Gemalto recently launched a range of contactless payment solutions including payment cards and wearables. Giesecke & Devrient has partnered with major banks in Europe and Asia to roll-out contactless payment technologies at scale. While Verifone Systems has introduced lightweight and affordable payment terminals with extended battery life to drive contactless acceptance across small shops and retail.
*Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it
