Contactless Payment Market By Type (Smartphone-Based Payments, Card-Based Payments), Application (Retail, Transportation), & Region for 2024-2031

Contactless Payment Market Valuation – 2024-2031

The rise of mobile wallets and apps enables easy contactless payments is propelling the adoption of contactless payment. Innovations in NFC and RFID technology improve transaction speed and security is driving the market size surpass USD 13.29 Billion valued in 2024 to reach a valuation of around USD 24.75 Billion by 2031.

In addition to this, Consumers prefer quick, seamless transactions without the need for cash or physical cards is spurring up the adoption of contactless payment. A growing preference for digital transactions drives the expansion of contactless payment solutions worldwide is enabling the market to grow at a CAGR of 8.08% from 2024 to 2031.

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Contactless Payment Market: Definition/ Overview

Contactless payment is a secure method of transacting that allows consumers to make payments without physically touching payment terminals. Utilizing technologies such as Near Field Communication (NFC) or radio-frequency identification (RFID), contactless payments enable users to simply tap their payment cards or mobile devices near a reader to complete a transaction quickly and conveniently. This method enhances the speed and efficiency of the payment process while reducing the need for cash handling.

In practice, contactless payments are widely used in retail environments, public transportation, and event ticketing. Consumers can use contactless-enabled debit or credit cards, smartphones, or smartwatches to pay for goods and services seamlessly. The convenience of contactless payments has gained significant popularity, particularly in response to the COVID-19 pandemic, as businesses and consumers sought safer, hygienic alternatives to traditional cash and card transactions.

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How Rapid Adoption of Smartphones and Wearable Devices Increase Adoption of Contactless Payment?

The rapid adoption of smartphones and wearable devices is a key driver of the contactless payment market, enabling consumers to make secure transactions with just a tap or wave. This trend has been accelerated by the increasing integration of Near Field Communication (NFC) technology in mobile devices, making it easier for users to leverage digital wallets and mobile payment apps. The convenience and speed of contactless payments have led to widespread acceptance across various industries, from retail to public transportation. According to the U.S. Federal Reserve, the share of smartphone owners who used mobile payment apps increased from 40% in 2019 to 54% in 2023, highlighting the growing preference for contactless payment methods.

The ongoing COVID-19 pandemic has significantly boosted the demand for contactless payment solutions, as consumers and businesses seek to minimize physical contact during transactions. This shift in consumer behavior has prompted many retailers and service providers to implement or upgrade their point-of-sale systems to support contactless payments. The increased focus on hygiene and safety has also led to the adoption of contactless payments in sectors that traditionally relied on cash transactions. A study by the Bank of Canada in 2024 found that 58% of Canadians reported using contactless payments more frequently since the start of the pandemic, with 79% stating they intend to continue using these methods post-pandemic.

Government initiatives and regulatory support have been instrumental in driving the growth of the contactless payment market. Many countries have increased contactless payment limits and implemented policies to encourage the adoption of digital payment methods, fostering a cashless economy. This supportive regulatory environment has created opportunities for innovation and competition among payment service providers. In August 2024, Visa announced the launch of its new contactless payment platform in partnership with major banks across Asia, featuring enhanced security measures and support for cryptocurrency transactions.

Will Lack of Infrastructure Hinder the Market Growth of Contactless Payment?

The contactless payment market faces several restraints that can hinder its growth and adoption. One significant concern is security. Although contactless transactions employ encryption and tokenization, the perceived vulnerability to fraud and unauthorized access can deter some consumers. Reports of card skimming or unauthorized charges may lead individuals to distrust contactless payment methods, impacting their willingness to adopt this technology.

Another major restraint is the lack of infrastructure in certain regions. While urban areas tend to have widespread access to contactless payment terminals, rural or less developed areas may not be equipped with the necessary technology. This uneven infrastructure can limit the usability of contactless payments for many consumers, preventing widespread adoption and creating a barrier for merchants who may be hesitant to invest in new payment systems.

Also, consumer behavior and preferences also pose challenges. Some individuals still prefer traditional payment methods, such as cash or chip-and-PIN cards, due to familiarity or concerns about technology. Additionally, demographic factors, such as age and digital literacy, can influence acceptance. Older generations, for instance, may be less comfortable with contactless payments, resulting in a slower overall adoption rate across different consumer segments. Addressing these behavioral and attitudinal barriers is crucial for the broader acceptance of contactless payment solutions.

Category-Wise Acumens

Will Rise in Adoption of Smartphone-Based Payments Drive Contactless Payment Market?

Smartphone-based payments have emerged as the dominant force in the contactless payment market, driven by the ubiquity of smartphones and the convenience they offer for digital transactions. The integration of Near Field Communication (NFC) technology and secure element chips in modern smartphones has enabled them to function as digital wallets, allowing users to make payments with just a tap. This technology has been widely adopted across various sectors, from retail to public transportation, revolutionizing the way consumers interact with businesses. According to the U.S. Federal Reserve’s 2023 Survey of Consumer Payment Choice, 65% of smartphone owners reported using mobile payment apps for in-store purchases, up from 39% in 2020, highlighting the rapid growth of smartphone-based contactless payments.

The COVID-19 pandemic has further accelerated the adoption of smartphone-based contactless payments, as consumers seek safer, touch-free alternatives to cash and traditional card transactions. This shift in consumer behavior has prompted businesses to prioritize mobile payment options and invest in upgrading their point-of-sale systems to support smartphone-based transactions. The increased focus on hygiene and social distancing has also led to the expansion of smartphone payment capabilities in sectors that previously relied heavily on cash, such as small businesses and street vendors. A study by the Bank of England in 2024 found that smartphone-based contactless payments accounted for 43% of all in-person transactions in the UK, compared to 28% in 2021, demonstrating the growing preference for this payment method.

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

The retail industry has witnessed a significant shift towards contactless payments, driven by consumer demand for convenience and safety. This trend accelerated during the COVID-19 pandemic, with the U.S. Census Bureau reporting a 35.8% increase in e-commerce sales in 2020 compared to the previous year. Major retailers like Walmart and Target have expanded their contactless payment options, including mobile wallets and tap-to-pay cards, to cater to changing customer preferences.

As contactless payment adoption grows, the market is expected to reach new heights in the coming years. According to the Federal Reserve’s 2022 Diary of Consumer Payment Choice, contactless card payments accounted for 26% of all in-person credit card transactions, up from just 7% in 2019. This rapid growth has prompted key players to innovate further, with Mastercard recently announcing the launch of its Biometric Checkout Program in May 2023, allowing consumers to pay using facial recognition or fingerprint scanning.

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Country/Region-wise Acumens

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

North America is emerging as a dominant force in the global contactless payment market, driven by rapid technological adoption and changing consumer preferences. The United States has been at the forefront of this shift, with the Federal Reserve reporting that 43% of smartphone owners used mobile payment apps in 2020, up from 37% in 2019. This growth has been further accelerated by the COVID-19 pandemic, prompting major retailers and financial institutions to expand their contactless payment offerings. In May 2023, Visa announced the launch of its Tap to Phone technology across the U.S., enabling small businesses to accept contactless payments directly on their smartphones without additional hardware.

Canada has also played a significant role in the region’s contactless payment dominance, boasting one of the highest adoption rates globally. According to Statistics Canada, 62% of Canadians reported using contactless payments for most of their purchases in 2021, a substantial increase from pre-pandemic levels. This widespread acceptance has encouraged innovation in the sector, with Canadian banks and fintech companies continuously introducing new contactless solutions. In a recent development, Royal Bank of Canada (RBC) revealed in July 2023 its partnership with Google Pay to offer enhanced digital wallet capabilities, further solidifying North America’s position in the contactless payment landscape.

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

The Asia Pacific region is experiencing rapid growth in the contactless payment market, driven by increasing smartphone penetration and government initiatives promoting digital transactions. China leads the charge, with the People’s Bank of China reporting that mobile payments accounted for 66% of all non-cash transactions in 2022, up from 60% in 2021. This trend is reflected across the region, with countries like India and Singapore also seeing significant adoption. In a recent development, Alipay+ announced in August 2023 its expansion to South Korea, partnering with major local retailers to facilitate cross-border payments for Chinese tourists.

Southeast Asian countries are quickly catching up in the contactless payment race, with governments actively promoting cashless societies. According to Bank Indonesia, the value of e-money transactions in the country grew by 32.3% in 2022 compared to the previous year. This growth has attracted major players and local startups alike, fostering a competitive and innovative market. In July 2023, Grab, a leading super app in Southeast Asia, launched its GrabPay Card in Thailand, allowing users to make contactless payments both locally and internationally, further accelerating the adoption of digital payments in the region.

Competitive Landscape

The contactless payment 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 market include:

• Visa
• Mastercard
• American Express
• PayPal
• Square
• Apple Pay
• Google Pay
• Samsung Pay
• Stripe
• Adyen
• Worldpay
• Ingenico
• Verifone
• NCR Corporation
• Clover (Fiserv)
• PAX Technology
• Toast
• Shopify
• Zelle
• WeChat Pay

Latest Developments

• In September 2023, major retailers including Walmart and Target announced the expansion of their contactless payment options, integrating biometric authentication to enhance security and speed up the checkout process.
• In August 2023, Visa and Mastercard launched a new initiative aimed at promoting contactless payment adoption among small businesses, offering incentives for merchants to upgrade their payment systems.

Report Scope

Contactless Payment 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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