The global contactless payments market is experiencing rapid growth, driven by a number of key factors. These include increasing demand for digital transactions, rising adoption of smartphones and wearables, and growing e-commerce activity. North America is a major player in this market, fueled by government initiatives, expanding financial institutions, and rising consumer awareness.
The contactless payment market is segmented by payment mode, component, and region. By payment mode, the market is segmented into smartphones, smart cards, PoS terminals, and others. In 2023, the smartphones segment held the largest share of the market. Smartphones are among the most convenient devices to store credit and debit card information securely. As smartphones are equipped with contactless payment technology, users can seamlessly perform transactions utilizing RFID and NFC to connect with payment terminals.
Based on component, the market is segmented into hardware, solutions, and services. The hardware segment held the largest share of the contactless payments market in 2023. Further, the solutions segment is expected to register the highest CAGR during 2023–2031. Contactless payment hardware encompasses the physical devices and technology to facilitate secure transactions without any physical contact between payment devices and point- of-sale (POS) terminals. Examples include 3-in-1 Reader, Terminal, Mini, Keypad, PINPad Pro, Flex, and POS+.
Key Market Drivers:
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Efficiency and Cost-Effectiveness:
Contactless payment technologies enable transactions through chips embedded in payment cards, tags, wearables, and mobile phones. Contactless payment offers quick bank approvals and instant money transfers, reducing the waiting time and improving efficiency. The contactless payment also allows the monthly auto-pay method to save time and earn rewards. Moreover, the contactless payment option has lower processing fees than manually keyed-in payments. Furthermore, contactless payment speeds up transactions, helping a huge crowd with instant payment. For example, Barclaycard provides contactless credit cards; through the card, the transactions take half a second to process, which is seven times faster than requiring guests to pay with a chip card and enter a PIN.*
Technological Advancements:
The adoption of new payment technologies, such as NFC, facilitates machine-to-machine communication and IoT integration. Customers can directly tap or wave their mobile device near an NFC-equipped card reader. The process of holding a chipped card or smartphone against the reader provides an extra layer of security, making contactless payments safe and secure.Key Market Players:
Some of the key players in the contactless payments market include Visa, Mastercard, Giesecke+Devrient GmbH, Ingenico, and IDEMIA. These companies are actively developing and deploying new contactless payment solutions, including wearables, biometric payment cards, and LED dual payment cards.
The Future of Contactless Payments:
The future of contactless payments is bright, driven by the continued growth of mobile payments, the rise of the Internet of Things (IoT), and the increasing focus on security and convenience. The integration of contactless payment into wearable devices and the development of new payment technologies, such as biometrics, are expected to further drive market growth.
Benefits of Contactless Payments:
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Convenience:
Faster transactions can be enabled with a single tap or wave of a card or smartphone without using cards or cash.*
Speed:
Owing to quick transactions, wait time is drastically reduced for both customers and companies. This is especially helpful in crowded retail contexts for quick payments to boost customer satisfaction and overall efficiency.*
Enhanced Security:
Tokenization is a procedure that replaces sensitive card information with a unique identifier or token, which improves security for contactless cards and mobile payment apps. This implies that even if a transaction is intercepted, the token retains no value and cannot be utilized fraudulently. Furthermore, no physical contact lower the risk of card skimming or identity theft.*
