Contactless Payment Market

Market Overview

The global contactless payment market size was valued at USD 2,235 billion in 2021. It is projected to reach USD 12,245 billion by 2030, growing at a CAGR of 20.8% during the forecast period (2022–2030).

For a secure transaction, contactless payment systems work in tandem with RFID and Near Field Communication (NFC) technologies and are protected by numerous layers of security. Additionally, it allows executive payments to be made by tapping a contactless card or payment-enabled devices. In addition, contactless payments are employed in the BFSI, retail, energy & utilities, and several other industries due to the advantages this technology offers, such as shortened transaction times, more convenience, and leveraging consumer experiences at POS terminals during transactions.

The rise in smartphone penetration increased convenience & reduced transaction time provided by contactless payments, and increased demand for mobile & wearable payment devices boosted the market growth. Moreover, the integration of IoT and contactless payments technology and increase in adoption in emerging economies are expected to grow in the market growth in the coming years.

Market Dynamics

Global Contactless Payments Market Drivers

• Surge in Demand for Mobile & Wearable Payment Devices

The demand for mobile & wearable payment devices is experiencing a continuous rise in the market due to massive changes in consumer behavior and preferences toward payment options. Therefore, this increased usage of mobile & wearable devices promotes the use of contactless payment methods. Moreover, customers are increasingly linking their bank accounts to mobile wallets and other devices, accelerating the demand for contactless payments in the market. An increase in awareness toward advanced payment devices and a surge in the adoption of technologies also drive the market growth.

• Rise in Adoption of Technology by Merchants for Small Value Transactions

Consumers are increasingly using mobile payment systems as contactless payments are executed through smartphones, which use Near-Field-Communication (NFC) technology. In addition, customers can swipe their smartphone over a card reader to purchase without using credit and debit cards or counting out cash. Consequently, merchants & retailers are adopting contactless payment technology in their businesses, with consumers using contactless payments for day-to-day transactions. Therefore, the adoption of contactless payments technology among merchants is one of the significant factors that propel market growth.

Global Contactless Payments Market Restraint

• Security Issues Associated with Technology

Concerns regarding theft and security have created a lack of trust in contactless payments among individuals. In addition, the absence of a pin facility during the transaction further proliferates security issues in cardholders' minds, causing a lack of trust in contactless payments among the public. Moreover, the risk of spyware, malware, and virus attacks due to numerous systems limits the adoption of contactless payment globally. These factors are expected to hamper market growth.

Global Contactless Payments Market Opportunities

• Untapped Potential of Emerging Economies

Developing economies offer significant opportunities for contactless solution providers to expand their offerings, as consumers are increasingly adopting contactless payment methods and merchants are implementing advanced technologies in their existing business processes. Moreover, benefits associated with cashless technology, such as reduced tax evasion and increased scope for monetary policy in the payment systems, are expected to boost market growth.

High investments in developing and transforming existing product lines, improving operations that address customer demands, and increasing productivity of business operations are the major factors expected to boost the market growth. Furthermore, India, China, Australia, Singapore, and South Korea are becoming primary adopters of contactless payment solutions. A surge in the adoption of smartphones in these economies is expected to create potential for the market in the upcoming years.

Regional Analysis

Region-wise, the global contactless payment market is analyzed across North America, Europe, Asia-Pacific, and LAMEA.

Europe is the highest revenue contributor and is estimated to grow at a CAGR of 19.3% during the forecast period. The firms in various European countries, including the UK, Germany, and France, use contactless payments technology to facilitate business transactions between counterparties and drive operational efficiencies. In addition, the penetration of new technology such as machine learning and artificial intelligence is making considerable improvements in the contactless payments market, helping banks and financial institutions to streamline their existing payment services. An increase in consumer demand for smartphones & wearables and smart cards is also anticipated to present a tremendous opportunity for the market in the following years.

Asia-Pacific is the second-largest region and is projected to reach USD 3,740 billion by 2030, growing at a CAGR of 22.3%. China, India, and Singapore are some of the major countries that drive the growth of the contactless payments market in the region. In addition, the various governments across Japan, Malaysia, and Indonesia are encouraging the banking and financial industry to implement contactless payments technology. Furthermore, due to changes in consumer trends and preferences toward executing online payments, several retailers and merchants in Asia-Pacific are adopting contactless payments to boost business efficiency and sustain the competitive business environment.

North America is the third-largest region. The market is expected to experience growth owing to technological advancements and developments in contactless payment devices. The adoption of contactless payment solutions by banks and financial institutions also drives market growth. Moreover, various companies have started providing contactless payment solutions, which is expected to foster their existing product portfolio. This is a significant driver of North America's contactless payments market growth.

Segmental Analysis

The global contactless payment market is segmented based on device type, application, and region.

Device type-wise, the global contactless payment market is divided into Smartphones & Wearables, Smart Cards, and Point-of-Sale (POS) Terminals.

The Smartphones & Wearables segment is the highest contributor to the market and is estimated to grow at a CAGR of 19.7% during the forecast period. Contactless payments executed through mobile handsets & wearable devices such as smartwatches, smart jackets, and others are covered in this segment. Technological advancements in wearables such as smartwatches, wristbands, and finger rings, to enable contactless payments are becoming significant trends in the market. Moreover, contactless payments technology is easy to use, reduces the time required for small transaction processes, and its integration with mobile handsets increases the popularity of contactless payments.

The Smart Cards segment is the fastest growing. A smart card is a contactless 13.56-MHz credential with an embedded integrated circuit. It can store data and communicate with a terminal via near-field communication (NFC). It can also be used for identification and authentication (such as the transportation worker identification credential (TWIC) required for transportation security administration). Furthermore, the rise in the adoption of contactless payment devices has created the need for new security applications, owing to increased chances of security attacks. This need is catered by hardware-based security chips working with software & system security features to provide barriers against unauthorized access and misuse. Conversely, smart cards are used for both contact & contactless payments and also include security, creating new opportunities in the contactless payments market.

The Point-of-Sale (PoS) Terminal is the second largest segment. A PoS terminal is a hardware system that processes card payments at retail locations. It enables ease of use, reduces the time required for small transaction processes, and its integration with mobile handsets increases the popularity of contactless payments. Increased need for convenient payment options, demand for personalization and customization in the retail sector, and reduced probability of mechanical error among PoS devices are some factors that fuel the market demand during the forecast period. The primary benefit to merchants using NFC-enabled PoS terminals is that contactless transactions can improve transaction speed, thereby reducing the time required in queues at PoS.

Application-wise, the global contactless payment market is segmented into Food & Grocery, Pharmacy & Drug Stores, Restaurants & Bars, Consumer Electronics, Media & Entertainment, and Others.

The Food & Grocery segment is the highest contributor to the market and is estimated to grow at a CAGR of 18.2% during the forecast period. Several retailers across emerging countries such as India, Mexico, and Brazil are adopting contactless payment services for their customers, owing to its numerous benefits such as improved operational efficiencies, better customer satisfaction, an upsurge in revenue, and lower operating cost. The surge in penetration of online payments among end-users in various food & grocery shops also drives the market growth. Furthermore, several grocery owners and food retailers are adopting advanced technology-based contactless payments systems to upsurge their profit margin, which boosts the development of the market.

The Media & Entertainment segment is the fastest growing. Sports organizations across the globe have adopted contactless payment options to reduce significant problems for owners, including counting tickets, pricing & change requirement, reconciliation, transaction times, improving security, and reducing potential theft. Moreover, due to changes in consumer behavior for booking tickets and availing of live shows, the media & entertainment industry is increasingly adopting contactless payment, which drives the market's growth.

The Restaurants & Bars segment is the second largest. Various global hotels are providing contactless payment options to their customers for using different services outside the hotel, including spa treatments and shopping. For instance, in 2020, according to a new research study from Oracle & Skift, more than 70% of hotel executives are expected to use contactless payment and digital messaging services, indicating a 35% contactless payments adoption among consumers in the market. Furthermore, the rise in adoption of contactless payment systems option by hotel industries to provide enhanced payment options and high security to the transactions from various cyber-attacks to their customers drive the growth of the market in this segment. 

Recent Developments

• June 2022 - A leading provider of security technologies, Giesecke+Devrient (G+D), announced the purchase of Valid USA's payment and identification solutions division. With this move, G+D hopes to hasten expansion in the United States, one of the world's most significant payments and identification markets. The increased business scale will benefit G+D clients facing ongoing supply chain issues affecting the whole industry.
• June 2022 - G+D Ventures, the venture capital arm of Giesecke+Devrient (G+D), partnered with the European Investment Bank to invest in European startups working on solutions for greater security and trust in the digital world.
• May 2022 - Giesecke+Devrient (G+D) presented a new type of banknote at the Global Currency Forum. The innovative "Green Banknote" acts as a blueprint for using ecological, resource-saving materials and production processes­ for banknotes. Coupled with durability and state-of-the-art security features, it contributes to a more environmentally friendly and efficient cash cycle.
• April 2022 - The most significant trends in how banks, financial institutions, and financial service providers will engage with their customers in the near future were identified in the new survey "Opportunities in the phygital environment" done by Global Data on behalf of Giesecke+Devrient (G+D). The combination of physical and digital services is obviously in the spotlight.
• February 2022- PAX Technology, Inc., one of the world's largest global payment solution providers and the #2 mobile POS provider, was entrusted with providing contactless and secure ways to pay at the WM Phoenix Open.