Contactless Payment Market Size, Share & Trends Analysis Report By Device (Smartphones & Wearables, Point-of-Sales Terminals, Smart Cards), By Solution, By Application, By Region, And Segment Forecasts, 2020 - 2027

Report Overview

The global contactless payment market size was valued at USD 1.06 trillion by transaction value in 2019 and is anticipated to expand at a compound annual growth rate (CAGR) of 19.8% from 2020 to 2027. This shift in demand can be attributed to the mass adoption of the system by several sectors, including retail and transportation, thereby offering convenience to the customers. Furthermore, the rising adoption of contactless technology by the users or customers for small value transactions is expected to drive the growth. The continuous enhancement in payment security technologies and innovation in products and services is strengthening the market growth. Contactless payments enable transactions to be carried out without any physical connection between a consumer’s payment device and point-of-sale terminal.

Mobile phone payments, key fobs, stickers, and cards are some of the devices used for conducting contactless payments. This payment methods offer efficient and quick payment solutions through an EMV contactless card, NFC mobile phone, or standard contactless travel card. The paradigm shift in payment preferences and awareness among customers are other factors expected to drive the market growth over the forecast period.

In this payment method, purchases are made by waving a card over the reader, thereby enhancing customer experience, and reducing queues. As a result, this transaction method enable faster transactions as compared to PIN and chip or cash transactions. Technological innovations, such as contactless rings or bands, in the wearables segment, are expected to drive the market demand. Growing contactless technologies in various applications such as vending machines, ticketing, toll booths, and fuel stations are expected to boost the market growth over the forecast period.

COVID-19 Impact Insights

Contactless payments are anticipated to increase and become a more preferred method of payment amid the spread of COVID-19 as contactless payment methods require less physical interaction. However, a bulletin from the Bank for International Settlements (BIS) says that the risk of virus transmission by cash usage is lower compared with other frequently touched objects, such as PIN pads and credit card terminals. Perceptions that cash could spread pathogens are expected to change the payment behavior by firms and users irrespective of whether concerns are justified or not. Digital wallets or other smartphone-based payment interfaces have emerged as potential solutions for payments to prevent virus spread.

Current developments in digital payments have encouraged the use of contactless payments amid this pandemic. For instance, in April 2020, the Neobank Upgrade (U.S.) has launched the new contactless credit card available in digital form that supports Google Pay and Apple Pay mobile wallets. Furthermore, 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. For instance, in April 2020, U.K. Finance Limited has increased the spending limit for contactless card payments from 30 Euros to 45 Euros. Therefore, the market is expected to stimulate, with the growing concerns over virus transmission via cash flows.

Device Insights

In 2019, the smartphones & wearables segment accounted for around 59% of market share, in terms of the transaction value. The use of smartphones has drastically increased in daily activities. For instance, individuals now use smartphones to make payments at stores. Moreover, innovations in wearables such as payment bands and payment rings are expected to drive the demand over the forecast period.

Further, smart cards are expected to gain significant market share over the forecast period, owing to its easier usage as compared to that of PIN-based Euro Mastercard Visa (EMV) cards. Various financial service providers are offering increased convenient payment mechanisms and transaction volumes by providing secure contactless payment devices. Vendors are partnering with mobile network operators to improve the services offered to customers. Understanding changing customer preferences and developing specific solutions in accordance with these preferences is expected to be a critical success factor for the market growth.

Solution Insights

In terms of transaction value, the payment terminal solution segment accounted for around 43% of the market share in 2019. Further, customers are mainly concerned about security surrounding contactless payments, since there is often a fear of fraud. Companies attempt to address such issues by providing secure payment systems that are authenticated through passcodes. The latest technological advancements have led to the invention of new ways of authentication, such as fingerprint authentication, for contactless payments.

The security and fraud management segment is expected to expand at a CAGR of 21.7% over the forecast period. As transactions carried out through contactless payments are susceptible to frauds due to which individuals have become more conscious about using these systems. Prominent contactless technology providers, including Gemalto and Visa Inc., are continuously upgrading their security protocols to enhance the security management of the contactless payments. Enhanced security systems and product developments have urged consumers to adopt contactless payments.

Application Insights

In terms of transaction value, the retail application segment accounted for around 62% of the market share in 2019. The growth can be attributed to an increase in the number of ‘tap-and-go’ transactions across the globe. The tap-and-go feature speeds up the check-out process and thus contactless payments are being preferred by the customers in developed as well as developing nations. Besides, contactless payments also find uses in service businesses, such as movie theaters, gas stations, restaurants, and convenience stores, thereby boosting the payments in the retail sector.

Several initiatives are taken by the government and public organizations to improve and upgrade the ticketing systems with the help of contactless payments. The rising application of contactless payment in the transportation segment is expected to boost the demand. The travel and tourism sector is growing globally, and hospitality has become one of the most prominent segments of this sector. The use of contactless payments is expected to be highly touted in this segment owing to advantages such as ease and convenience in payments that it offers to travelers.

Regional Insights

Europe accounted for the largest share of 33% in the contactless payments industry in 2019, owing to the high penetration of smartphones and advancements in smart chip technology. Further, the growth is mainly attributed to the increasing adoption rate, regulatory initiatives such as Euro Mastercard Visa (EMV), the global standard for chip cards, and the adoption of Near Field Communication (NFC) technology.

Additionally, the shift of transit authorities toward the usage of contactless payment services, such as Visa’s payWave service and Mastercard’s PayPass service, in the North America market is expected to augment the regional growth. Asia Pacific is expected to emerge as a prominent regional market, owing to the increasing adoption of mobile and contactless payment services. Also, key players are expanding their presence in Asia Pacific. For instance, in November 2019, Wirecard AG announced the acquisition of AllScore Payment Service Co., Ltd., a Beijing based payment service provider. With this acquisition, Wirecard AG expanded its geographical footprint in China.

Key Companies & Market Share Insights

Market leaders of this industry remain keen on staying ahead of their peers by performing mergers, acquisitions, partnerships, and alliances and innovation in terms of solutions. For instance, in January 2020, Visa Inc. and Samsung partnered to innovate the tap to phone program. Tap to phone technology enables micro-seller to accept payments using Android smartphones without any additional hardware. With this partnership, Visa Inc. would be integrating its pilot tap to phone application into Samsung’s Galaxy XCover Pro device. This partnership would assist Visa, Inc., in expanding the tap to phone technology across various verticals, including retail, healthcare, logistics, and manufacturing. Some of the prominent players in the contactless payment market include:

• Gemalto

• Visa Inc.

• Giesecke & Devrient GmbH

• Heartland Payment Systems, Inc.

• Verifone

• Ingenico Group SA

• On Track Innovations Ltd.

• IDEMIA

• Thales Group

• Wirecard AG

Contactless Payment Market Report Scope

Segments Covered in the Report

This report forecasts transaction value growth at global, regional, and country levels and provides an analysis of the latest industry trends and opportunities in each of the sub-segments from 2016 to 2027. For the purpose of this study, Grand View Research has segmented the global contactless payment market report based on device, solution, application, and region:

• Device Outlook (Transaction value, USD Billion, 2016 - 2027)

  • Smartphones and Wearables

  • Point-of-Sales Terminals

  • Smart Cards

• Solution Outlook (Transaction value, USD Billion, 2016 - 2027)

  • Payment Terminal Solution

  • Transaction Management

  • Security and Fraud Management

  • Hosted Point-of-Sales

  • Analytics

• Application Outlook (Transaction value, USD Billion, 2016 - 2027)

  • Retail

  • Transportation

  • Healthcare

  • Hospitality

  • Government

• Regional Outlook (Transaction value, USD Billion, 2016 - 2027)

  • North America

    • U.S.

    • Canada

    • Mexico

  • Europe

    • Germany

    • U.K.

    • France

    • Italy

    • Spain

  • Asia Pacific

    • China

    • Japan

    • India

    • Australia

    • South Korea

    • Singapore

    • Taiwan

  • South America

    • Brazil

  • Middle East and Africa