Contactless Payment Transaction Market By Mode of Payment (Contactless Card, Wearable Devices), End-User (Retail, Media & Entertainment), & Region for 2024-2031

Contactless Payment Transaction Market Valuation – 2024-2031

The rise of mobile wallets and NFC-enabled devices are propelling the adoption of contactless payment transaction. Businesses are increasingly equipping themselves with contactless payment systems to enhance customer experience, this is driving the market size surpass USD 14.36 Billion valued in 2024 to reach a valuation of around USD 34.93 Billion by 2031.

In addition to this, supportive regulations and incentives for digital payments promote the shift towards cashless transactions, this is spurring up the adoption of contactless payment transaction. The expansion of online shopping encourages the adoption of contactless solutions for both in-store and online transactions, this is enabling the market grow at a CAGR of 11.75% from 2024 to 2031.

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Contactless Payment Transaction Market: Definition/ Overview

Contactless payment transactions refer to the method of making payments without the need for physical contact between the payment device and the terminal. This technology utilizes Near Field Communication (NFC) or radio-frequency identification (RFID) to enable secure transactions by simply tapping a card, smartphone, or wearable device near a compatible payment terminal. The process is designed to be quick and efficient, enhancing the overall user experience.

Contactless payments are widely used in various sectors, including retail, public transportation, and hospitality. In retail, consumers can make swift purchases at checkout counters by tapping their cards or smartphones, reducing wait times. In public transportation, contactless cards or mobile apps allow users to pay fares seamlessly, promoting cashless travel. Additionally, many businesses are adopting contactless payment solutions to cater to consumer demand for convenience and speed.

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How will Rapid Adoption of Smartphones and Wearable Devices Increasing the Adoption of Contactless Payment Transactions?

The rapid adoption of smartphones and wearable devices has significantly propelled the contactless payment transaction market forward. With the global smartphone penetration rate reaching 78% in 2020 according to the Pew Research Center, consumers have increasingly embraced the convenience of mobile wallets and contactless payments. This trend has accelerated in recent years, with Apple announcing in June 2023 that Apple Pay transactions had grown by over 50% year-over-year, demonstrating the growing preference for contactless methods.

The COVID-19 pandemic has acted as a catalyst for contactless payment adoption, as consumers and businesses sought safer, touch-free transaction methods. The U.S. Federal Reserve reported that contactless payments increased by 34% in 2020 compared to the previous year. This shift in consumer behavior has prompted businesses across various sectors to invest in contactless payment infrastructure. In August 2023, Mastercard unveiled its latest innovation, the Biometric Checkout Program, which allows consumers to pay using facial recognition or fingerprints, further expanding contactless options.

Government initiatives and regulations supporting digital payments have also driven market growth. The European Central Bank reported that the share of contactless payments in the euro area rose from 41% in 2019 to 62% in 2022. This surge can be partially attributed to increased contactless payment limits implemented by many European countries during the pandemic. In response to this growing demand, Visa announced in July 2023 the expansion of its Tap to Phone technology to 15 new markets, enabling small businesses to accept contactless payments directly on their smartphones without additional hardware.

Will Lack of Widespread Infrastructure of Contactless Payment Transaction Restrain Its Market Growth?

The free contactless payment transaction market faces several restraints that can impact its growth and adoption. One significant challenge is the lack of widespread infrastructure. Many smaller retailers and businesses may not have the necessary payment terminals or technology to support contactless transactions, limiting consumer access and reducing overall usage.

Another restraint is security concerns. Despite advancements in encryption and security features, some consumers remain wary of potential fraud and data breaches associated with contactless payments. This apprehension can hinder the willingness to adopt these payment methods, especially among older demographics who may be less familiar with the technology.

Additionally, varying regulations across different regions can create complications. Compliance with local laws regarding digital payments can be complex and costly for businesses. This inconsistency may slow the implementation of contactless payment systems, particularly in countries with stringent regulatory frameworks.

Also, competition from alternative payment methods, such as mobile banking and traditional card payments, poses a challenge. As consumers have numerous options for making transactions, the unique benefits of contactless payments must be clearly communicated to encourage greater adoption, or they risk being overlooked in favor of more familiar methods.

Category-Wise Acumens

Will Rise in Adoption of Contactless Mobile Payments Drive Contactless Payment Transaction Market Growth?

Contactless mobile payments have emerged as a dominant force in the contactless payment transaction market, driven by widespread smartphone adoption and evolving consumer preferences. According to the Federal Reserve’s 2022 Diary of Consumer Payment Choice, mobile payment usage in the United States increased by 12% from 2020 to 2021. This trend is reflected globally, with consumers increasingly relying on their smartphones for quick and convenient transactions. In August 2023, Google announced the expansion of its Google Wallet to support digital IDs and driver’s licenses in select U.S. states, further integrating mobile devices into daily financial interactions.

The rise of near-field communication (NFC) technology has been instrumental in the proliferation of contactless mobile payments. The European Central Bank reported that in 2022, 62% of all in-person card payments in the euro area were contactless, up from 41% in 2019. This significant increase demonstrates the growing consumer comfort with tap-to-pay technology. Capitalizing on this trend, Samsung unveiled its Wallet platform in February 2023, combining digital payments, IDs, and keys in one secure mobile application, enhancing the convenience and versatility of mobile payment solutions.

Which Factors Enhance the Use of Contactless Payment Transaction in Retail Industry?

The retail industry has emerged as a dominant force in the contactless payment transaction market, driven by changing consumer preferences and the need for faster, more convenient checkout experiences. According to the U.S. Department of Commerce, e-commerce sales accounted for 14.6% of total retail sales in the second quarter of 2023, highlighting the growing importance of digital and contactless payment options. This shift has prompted major retailers to invest heavily in contactless payment infrastructure. In September 2023, Walmart announced the expansion of its “Scan & Go” technology to all U.S. stores, allowing customers to scan items and pay using their smartphones, further streamlining the checkout process.

Brick-and-mortar retailers have rapidly adopted contactless payment technologies to remain competitive and meet customer expectations. The UK Finance’s Payment Markets Report 2023 revealed that contactless payments accounted for 57% of all card transactions in the UK in 2022, demonstrating the widespread acceptance of this technology in retail settings. This trend has led to innovations in point-of-sale systems. In August 2023, Square introduced its latest contactless payment terminal with a customer-facing display, designed specifically for retail environments to enhance the shopping experience and reduce checkout times.

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Country/Region-wise Acumens

Will Early Adoption of Technologies in North America Mature Contactless Payment Transaction Market?

North America has emerged as a dominant force in the contactless payment transaction market, driven by rapid technological adoption and a strong financial infrastructure. According to the Federal Reserve Bank of San Francisco, contactless payments in the United States increased by 150% between 2019 and 2021, indicating a significant shift in consumer behavior. This growth has been further accelerated by the pandemic and the increasing availability of contactless-enabled cards and devices. In August 2023, Visa reported that over 80% of in-person transactions in the U.S. now occur at contactless-enabled merchant locations, showcasing the widespread acceptance of this technology across the region.

The Canadian market has been particularly progressive in contactless payment adoption. Statistics Canada reported that in 2022, 85% of Canadians used contactless payments for in-store purchases, up from 62% in 2019. This high adoption rate has made Canada a key testing ground for innovative payment solutions. In July 2023, Mastercard announced the launch of its biometric payment program in Canada, allowing consumers to authenticate purchases using facial recognition or fingerprints, further enhancing the convenience and security of contactless transactions in the North American market.

Will Rising Industrialization Enhance Adoption of Contactless Payment Transaction in Asia Pacific?

The Asia Pacific region is experiencing rapid growth in the contactless payment transaction market, driven by increasing smartphone penetration and government initiatives promoting digital payments. According to the Reserve Bank of India, the volume of contactless card transactions in the country grew by 187% in FY 2022-23 compared to the previous year. This substantial increase reflects the region’s swift adoption of contactless technologies. In July 2023, Alipay+ announced its expansion to South Korea, partnering with local mobile payment service Kakao Pay, further integrating cross-border contactless payment solutions across the Asia Pacific region.

China continues to lead the contactless payment revolution in Asia Pacific, with its advanced mobile payment ecosystem. The People’s Bank of China reported that in 2022, mobile payments accounted for 86.4% of all non-cash transactions in the country. This dominance has inspired innovation across the region. In August 2023, Singapore’s DBS Bank launched a new feature allowing customers to make contactless ATM withdrawals using QR codes, eliminating the need for physical cards and enhancing convenience while maintaining security.

Competitive Landscape

The contactless payment transaction market is a dynamic and competitive space, characterized by a diverse range of players vying for market share. These players are on the run for solidifying their presence through the adoption of strategic plans such as collaborations, mergers, acquisitions, and political support.

The organizations are focusing on innovating their product line to serve the vast population in diverse regions. Some of the prominent players operating in the contactless payment transaction market include:

• Visa
• Mastercard
• American Express
• PayPal
• Samsung Pay
• Apple Pay
• Google Pay
• Square
• Stripe
• NFC Forum
• Adyen
• Ingenico
• Verifone
• Worldpay
• Zelle
• UnionPay
• EMVCo
• Bluefin
• Toast
• Clover

Latest Developments

• In August 2023, Visa announced the launch of a new contactless payment card that leverages biometric authentication, enhancing security and user convenience for transactions.
• In September 2023, Mastercard partnered with a leading fintech company to introduce a mobile wallet that supports multiple currencies and allows for seamless cross-border contactless payments.

Report Scope

Contactless Payment Transaction Market, By Category

Mode of Payment:

• Contactless Card
• Wearable Devices
• Contactless Mobile Payment

End-User:

• Retail
• Media & Entertainment
• Hospitality
• Healthcare

Region:

• North America
• Europe
• Asia-Pacific
• South America
• Middle East & Africa

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