CONTACTLESS PAYMENTS MARKET ANALYSIS

A contactless payment refers to a method that allows customers to securely pay through debit cards, credit cards, or from payment devices by using radio frequency technology (RFID) or near-field communication (NFC). A contactless payment solution is a payment method that does not involve any physical contact with cash, menu, bill, etc. Contactless payment is considered a quick and easy method to pay and it does not require customers to input a PIN. Companies are continuously leveraging the latest technologies to make contactless payment methods more secure and easy to use. Payment companies are also focusing on eliminating the physical contact of cards by introducing new digital payment methods such as google pay, apple pay, and Samsung pay. All major financial institutions are now offering contactless payment solutions the customers, owing to the increasing demand for cashless payment across the world. These factors are expected to the driving growth of the contactless payments market in the near future.

The global contactless payment market is estimated to account for US$ 12,316.5 Mn in terms of value by the end of 2021 and is expected to grow at a CAGR of 13.2% during the forecasted period (2022-2030).

Market Opportunity

Increasing use of digitalized payment options is expected to drive market growth over the forecast period. Emerging economies are easing their tax policies and companies are providing loyalty offers on every transaction to encourage people to opt for digital transactions instead of cash transactions. The payment industry is shifting towards EMV (Europay, MasterCard, and Visa) chip cards to provide improved security and finer control for offline transactions, which is expected to be another major factor fuelling the growth of the contactless payments market. Contactless payment card offers high security as compared to cash payment. For instance, in October 2019, SBI launched SBI Card Pay, a contactless mobile payment for all credit card users. This card provides faster, more convenient, and more secure card payment using mobile phones.

Moreover, the payment industry is shifting towards contactless payment methods such as Google Pay, Samsung Pay, and others. Payment industries are using contactless payment methods to protect users from fraud and provide a seamless experience such as Omni channel (personalized user experience), improving the security of cards through EMV (Europay, MasterCard, and Visa), loyalty offers on payment, and cardholder verification method (CDCVM) to verify user identity, which is expected to increase demand for contactless payments market. All these features provide the customer/company with more security, a cashless experience, and better tracking of expenses and reports based on spending, which is expected to drive the growth of the market.

Market Restraint

Security concerns and threats while adopting Contactless payment methods.

The major factor restraining growth of the global contactless payments market is lack of trust due to security concern, data theft, and misuse of the contactless payment methods other than the authorized user. The contactless payment do not require to input PIN, which makes it less secure than the conventional methods. Such factors are expected to hinder growth of the contactless payments market over the forecast period.

Contactless Payment Market - Impact of Coronavirus (Covid-19) Pandemic:

The COVID-19 pandemic witnessed high growth of the market during the forecast period. This is due to increasing demand for contactless payments from various sectors such as BFSI, retail, transportation, and others. Retail sectors were using contactless payments to ensure the safety of premises & employees, and are enforcing them to follow social distancing.

Moreover, due to COVID-19, contactless payments have become a more preferred payment method, as it requires less physical Interactions and is very helpful to contain the spread of COVID-19. Due to this reason, many companies had expanded their business by offering contactless payment solutions to their customers. In January 2020, Paytm launched a contactless QR code payment method through which users were able to do direct payments by a scanning QR code from their mobile minimizing direct contact with payment devices.

Competitive Scenario

Key players operating in the global contactless payments market include Thales Group, Infineon Technologies AG, Ingenico Group, Wirecard, VeriFone, Inc., Giesecke+Devrient GmbH, IDEMIA, Track Innovations LTD., Identiv, Inc., CPI Card Group Inc., Setomatic Systems, Valitor, PAX, PINPAD, Mobeewave, alcineo, and Paycor, Inc.

Recent Developments:

• In September 2022, Paycor HCM, Inc., a Human Capital Management software providing company, introduced, Paycor wallet, through this wallet employees were able to access earned wages and also able to access pay card information.
• In March 2021, Thales Group, a provider of innovative and secure digital solutions, introduced Contactless Payment method through wearable’s to AXIS Bank through this customers were able to perform transactions reliably and seamlessly. This innovation is expected to increase the growth of Contactless payments market.

Forecasted Europe is expected to hold a dominant position in Contactless Payment market in 2030

Statistics:

Europe held dominant position in the global contactless payments market in 2019, accounting for 42.8% share in terms of value, followed by Asia Pacific and North America.

Figure 1: Global Contactless Payment Market Share (%), By Region, 2021

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Europe is expected to be one of the prominent regions in the global market and witness high growth during the forecast period. This is owing to the high penetration of smartphone and enhancement in the technologies.

 Figure 2: Global Contactless Payment Market (US$ Mn) Analysis and Forecast, 2017 – 2030

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The Global Contactless Payment Market was valued at US$ 12,316.5 Mn in 2021 and is expected to reach US$ 36,929.05 Mn by 2030, growing at a CAGR of 13.2% between 2022 and 2030.