Key Market Overview:
Contactless Payments Market is projected to grow from USD 39.61 Billion in 2022 to USD 140.52 Billion by 2030, at a CAGR of 17.15% during the forecast period.
Contactless payments are a type of payment method that allows customers to pay for goods or services without physically touching a payment terminal or handing over cash. Instead, the payment is made using a contactless payment method such as a credit or debit card, a mobile phone, or a smartwatch. Contactless payments are integrated with mobile payment apps such as Google Pay, PayPal and PhonePay providing added convenience and flexibility for customers.
Contactless payments are becoming increasingly popular as they offer a fast and convenient way to pay for goods and services. The widespread adoption of smartphones and mobile devices has made it easier for consumers to make contactless payments using mobile wallets and other payment apps, driving the growth of the contactless payments market. For instance, in February 2022, Apple facilitated businesses to accept contactless payments through Tap to Pay on iPhone. The new feature allows customers to make payments using their iPhone or Apple Watch without the need to touch a payment terminal or hand over cash. Therefore, the increasing number of merchants accepting payments in multiple options is driving the adoption of digital payments among customers and supporting the growth of the contactless payments market.
Market Dynamics:
Driver:
Contactless payments using a smartphone offer a fast and convenient payment option that eliminates the need for cash, checks, or physical payment cards. As a result, businesses that accept contactless payments are able to fulfill the needs of tech-savvy consumers and improve the customer experience, driving the growth of the market. Moreover, the COVID-19 pandemic has accelerated the adoption of contactless payments, as consumers seek to avoid physical contact with payment terminals and cash, making contactless payments an increasingly important payment option for businesses. For instance, in March 2021, Axis Bank launched “Wear ‘N’ Pay,” a range of new-age payment solutions that enable customers to make secure, contactless payments using wearable devices.
Restraint:
Transaction limits on digital payments is the major barrier restraining the growth of the contactless payments market. Restrictions on the maximum transaction amount for contactless payments limiting the usefulness for high-value transactions. Furthermore, security is a major concern restraining the growth of the market as digital payment methods process sensitive customer payment information. Customers are aware of the potential risks associated with the collection and use of personal data, such as identity theft or financial fraud. Therefore, customers are hesitant to use digital payment methods thereby limiting the growth of the market.
Opportunities:
Integration of contactless payments with technologies such as smart home devices and voice assistants is providing potential opportunities for the growth of the contactless payments market. The integration of such technologies enables customers to make payments with voice commands and makes the process of payments more efficient and convenient.
Contactless Payments Report Coverage:
| Report Attributes | Report Details |
| Study Timeline | 2017-2030 |
| Market Size in 2030 (USD Billion) | USD 140.52 Billion |
| CAGR (2023-2030) | 17.15% |
| By Component | Hardware, Software, and Services |
| By Payment Mode | Mobile Handsets, Smart Cards, Point of Sale Terminals, NFC Chips, and Others |
| By End-Use | BFSI, Transportation, Hospitality, Retail, Healthcare, and Others. |
| By Geography | North America, Europe, Asia Pacific
Latin America, the Middle East, and Africa |
| Key Players | American Express, Giesecke+Devrient, Ingenico, InsideSecure, Square Inc., On Track Innovations, PAX Technology, Inc., Mastercard Inc.
|
Market Segmentation:
By Component
Based on the component, the market is segregated into hardware, software, and solutions. The hardware component dominates the contactless payments market due to the widespread adoption of consumer electronics such as smartphones, tablets, and laptops. Hardware components for contactless payments market include mobile handsets, Point of Sale Terminals, and NFC chips that are used to make the process of payments easy and convenient. For instance, in May 2020, Shopify launched Shopify point of sale (PoS) for merchants to help businesses by bringing together in-person and online sales.
The services segment is anticipated to register the highest CAGR during the forecast period. Increasing adoption of hardware devices demands regular services and solutions to facilitate digital payments. Solutions such as secure payment processing, fraud prevention, and customer support are contributing to the growth of this segment.
By Payment Mode
Based on the payment mode, the market is segmented into mobile handsets, smart cards, point of sale terminals, NFC chips, and others. The mobile handsets segment accounted for the largest revenue share in 2022. Mobile handsets are convenient to make online payments using digital payment apps such as Google Pay, PayPal, and PhonePay promoting the contactless payments market. For instance, in May 2022, PayPal launched Tap to Pay with Zettle for small businesses in the United Kingdom. The Tap to Pay feature allows businesses to accept contactless payments on mobile devices without the use of any additional hardware.
The smart cards segment is anticipated to register significant growth during the forecast period. Smart cards improve the security of transactions and are widely accepted among customers. Contactless smart cards further contribute to the growth of this segment as there is no need for direct contact. Contactless smart cards use radio frequencies to establish a wireless connection. For instance, AIIMS announced to introduce smart card facility at the counters to replace cash payments from 1 April 2023.
By End-Use
Based on end-user, the market is segmented into BFSI, transportation, hospitality, retail, healthcare, and others. The BFSI industry dominates the contactless payments market due to the convenience and ease of operating banking services. Contactless payments offer better customer experience by reducing transaction times and simplifying the payment process. Moreover, customers use digital methods for various processes such as insurance premium payments, and investment transactions. For instance, in October 2021, ICICI Bank launched iMobile Pay to facilitate contactless payments. The iMobile Pay app enables customers to perform transactions by waving their smartphone near a contactless PoS device to improve the overall shopping experience of the customers.
The hospitality industry is anticipated to register significant growth during the forecast period. Contactless payments offer a convenient and quick payment method for customers. Customers use their mobile devices to pay bills, eliminating the need for any physical interaction with the hotel staff. For instance, in June 2020, Shift4 launched a QR Pay payment solution allowing customers to pay bills at restaurants, retail stores, and hotels by simply scanning the QR code.
By Region
North America dominates the contactless payments market due to the increasing adoption of electronic devices in the region. North America has been at the forefront of payment technology advancements, including the adoption of contactless payments, mobile payments, and other payment methods driving the growth of the regional market. Furthermore, the presence of key players such as Square Inc., and American Express in the region is contributing to the growth of the contactless payments market.
Asia-Pacific is anticipated to register the highest CAGR during the forecast period. Asia-Pacific has great penetration of mobile internet usage, with many consumers preferring to shop online with smartphones and other mobile devices. Therefore, the growth of e-commerce in the region is accelerating the growth of the regional market. Moreover, there have been several mergers and collaborations in the region to promote digital payments across countries such as India, China, and Japan. For instance, in August 2022, Axis Bank partnered with BharatPe to expand its merchant-acquiring business. The partnership aims to enable BharatPe’s merchants to access Axis Bank’s wide range of banking products and services, including loans, insurance, and other financial services.
Contactless Payments Market Competitive Landscape:
The competitive landscape of the market has been analyzed in the report, along with the detailed profiles of the major players operating in the industry. Further, the surge in Research and Development (R&D), product innovation, various business strategies, and Application launches have accelerated the growth of the contactless payments market. Key players in the market include-
- American Express
- Giesecke+Devrient
- Ingenico
- InsideSecure
- Square Inc.
- On Track Innovations
- PAX Technology, Inc.
- Mastercard Inc.
Recent Developments:
- In October 2022, Deutsche Bank and Fiserv launched Vert, a payment acceptance and banking service provider for small and medium-sized enterprises.
- In September 2022, Square Inc. launched Tap to Pay on iPhone to accept contactless payments for sellers in the United States.
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