Contactless Payments Market: Drivers, Restraint & Future Growth
Stiff competition prevails in the global contactless payment transaction market. This is because there are a sizeable number of small and large service providers and entry into the market is quite easy. Of late, the entry of banks, card companies, telecom companies, and payment companies that are foraying into contactless payment services has further intensified competition in the market.
In order to ensure sustainable returns, service providers are focused on crafting innovative marketing strategies for a higher rate of conversion. For example, Samsung developed magnetic secure transmission, which releases a magnetic signal that imitates the magnetic strip on traditional payment cards.
The key factor driving the contactless payment transaction market is the increasing demand for speedy transactions, especially in the retail and transport sectors underpinned by the rising use of smartphones. Proving to be a hindrance, on the flip side, is the high installation cost of point-of-sale (PoS) machines for contactless payment as compared to normal PoS machines.
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As per a report by Transparency Market Research, the global contactless payment transaction market is projected to rise at a whopping 55.5% CAGR from 2017 to 2025 for the market’s valuation to reach US$801.44 bn by 2025.
Retail Leading End-use Segment due to Demand for Speedy Counter Sales Processes
In terms of mode of payment, the segments of the market are wearable devices, contactless card (RFID/NFC), and contactless mobile payment. The segment of contactless card (NFC/RFID) is estimated to contribute the leading revenue to the global contactless payment transaction market over the forecast period. The segment of wearable devices comprise transactions carried out over smart watch or smart band. The segment of wearable devices is anticipated to rise at a substantial rate in the upcoming years. Contactless mobile payment segment includes payments made via smartphones.
The global contactless payment transaction market is classified into hospitality, media and entertainment, transport, retail, healthcare, and others depending upon end use. Among these, the segment of retail is anticipated to contribute the leading revenue to the global market for contactless payment transaction followed by the transport and hospitality sectors in the coming years.
Europe to Remain at the Global Market’s Forefront
The global contactless payment market, based on geography, has been segmented into North America, Asia Pacific, Europe, the Middle East and Africa, and South America. Powered by the increasing adoption of NFC-enabled smart wearable devices and growing use of contactless cards, Europe is anticipated to display relatively speedy growth amongst other key regional segments. In the region, contactless cards is projected to contribute the leading revenue backed by growth in retail and transport end-use industries in the U.K., Poland, and Germany. According to the data published by the U.K. card association, the number of contactless cards issued in the U.K. was 857 million in 2015.
Asia Pacific is expected to display relatively fast adoption of NFC-enabled contactless devices and wearable devices with the launch of apps such as Samsung Pay. The region is expected to display higher growth rate over other regions and second after Europe. Within Asia Pacific, retail/e-commerce, hospitality, and transportation sectors are expected to contribute significant revenues backed by economic development in India, China, and South Korea.
North America contactless payment transaction market is displaying sound growth backed by a large consumer base of mobile phone users.
Some of the prominent names operating in the global contactless payment transaction market profiled in this report are Apple Inc., Barclays, Ingenico Group, Heartland Payment Systems Inc., Giesecke & Devrient GmbH, Inside Secure, Samsung Electronics Ltd., On Track Innovations Ltd., Verifone Systems Inc., Gemalto N.V., and Wirecard AG.
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