Carrying cash is increasingly becoming rare, especially in Western countries such as the U.S and the UK. Using just their phone or a tap of a card, millennials can buy almost everything that they want and can afford to pay for. No longer do you need coins or notes to pay for expenses such as an Uber ride home, food and drinks in a coffee shop, a tube or bus ride and many more. Welcome to the world of contactless payments!
There is no doubting that contactless payment is becoming the new norm pretty much everywhere, with consumers increasingly embracing the speed and convenience of the ‘tap-to-pay’ technology. According to some reports, this surge in the adoption of contactless payments will further accelerate in 2018 and the trend will continue for at least another few years.
According to a new research by Juniper Research—leading fintech analysts, the global value of contactless transactions via payment cards, mobiles, and wearables will reach $1.3 trillion by 2019, which is twice as much as the $590 billion it was worth in 2017. The research says that contactless card levels will continue to dominate transaction values, accounting for 80% of total contactless transactions in 2019. Additionally, it predicts that contactless transactions via debit/credit cards will exceed $2 trillion globally by 2021.
Juniper research is not only one predicting increased adoption of contactless payment methods. According to MaketsandMarkets—a leading provider of research reports and custom research services, the contactless payment market will grow from USD 6.70 Billion in 2016 to an estimated USD 17.56 Billion by 2021, at a Compound Annual Growth Rate (CAGR) of 21.2% during the forecast period.
The research says that this growth in the worth of the countless payment market will be driven by a reduction in queuing and transaction time, increased convenient in making low value payments, better customer insights, improved service delivery, ease of technology integration with existing cards, and increased revenue opportunity.
The Contactless Payments Market in the U.S and Some Other Countries
Americans were introduced to contactless payments long time back, much before it became a phenomenon globally. Although the U.S was the first to get a taste of contactless payments, it has lagged behind the likes of the U.K and Australia in terms of adoption rates. Despite adoption in the U.S lagging other countries, contactless payments are expected to rise steadily in the country, reaching nearly 230 million by 2021. This according to a 2016 research by ABI.
So, how do you the other countries compare to the U.S when it comes to the adoption of contactless payments? The UK has a 44% adoption rate and according to one report, contactless cards accounted for about a third of all card purchases in the U.K in 2016, up from 10% as recently as 2015.
Contactless payment cards are ubiquitous in Australia, and consumer acceptance has been strong compared to most other markets.
Australia is well ahead of markets like the US when it comes to contactless adoption. A 2016 Consumer Payments Insight Survey reveals that almost 80% of contactless card users in Australia find the technology useful while as much as 42% in the U.S believe contactless is no better than other forms of payment.Other countries with high contactless payments adoption rates include Hungary and France where adoption is approximately 60% and Switzerland where 90% of point-of-sale terminals (POS) are contactless enabled.
The typical consumer making contactless payments is someone comfortable in the digital world. The numbers suggest that contactless payment technologies have a long way to go before they catch up with other types of payment—at least in the eyes of consumers. According to a 2017 study conducted by Forrester Consulting and commissioned by JPMorgan Chase, only 16% of consumers in the U.S have used a digital wallet. Additionally, 46% of those surveyed prefer paying with credit cards, while only 15% of consumers prefer mobile wallets to other forms of payments.
The major advantage that contactless payments have over cards equipped with EMV chips is a slight increase in speed. Typically, a contactless payment takes one to two seconds. Also, as consumers in the U.S embrace mobile payment options like Apple Pay, issuers will be ideally positioned to capture the growing need for convenient contactless payment by leveraging their EMV infrastructures to enable a new generation of enticing payment opportunities for users.
The Current and Future Trends in the Global Contactless Payments Market
Europe Accounts for Most of the Market Share in the Contactless Payments Market
Due to technological advancement and increasing smart card roll-outs in the region, Europe is expected to hold the largest market share and dominate the contactless payments market in 2018 and beyond.
Mobile Handsets Payments is Expected to Be the Most Promising Payments Segments
Currently, contactless smart cards account for the major share in the contactless payment modes. However, mobile handsets are fast becoming the most preferred mode of payment in the developing countries of the world as these are more secure and convenient for the customers to make their payments.
Multi-Channel Payment and Value-Added Services Will Increase in Popularity and Adoption
The contactless payments market has been segmented into solutions, services, payment mode, and verticals. Currently, multi-channels payment and value-added services hold a major share in the contactless payments market and this will only grow in the future.
There you have it—the worth of contactless payments in the U.S and globally. For more information on the U.S or global contactless payments market, get in touch with us today!
by Bobby J Davidson
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