GLOBAL CONTACTLESS PAYMENTS MARKET
Contactless Payments as the name suggests, it is a mode of payment wherein the buyer’s card or smartphone does not come in contact with the payment reader to complete the transaction.
It includes RFID,QR (quick response) codes, mobile payments and NFC (near field communication) technology where the transactions take place over a specific radio frequency, initiating the communication between card or smartphone and the reader.
RFID tech works at a distance of several feet, but NFC only functions within a few inches
During the time like this where minimal physical contact is warranted, contactless payment is undoubtedly expected to see a huge rise in demand. However, minimal control over the contactless cards has led to enforce limit on the limit of the transaction in most of the countries.
GLOBAL CONTACTLESS PAYMENTS MARKET SEGMENTATION
By Mode of Payment
- Debit Card
- Credit Card
GLOBAL CONTACTLESS PAYMENTS MARKET DYNAMICS
Since the outbreak there has been an increase of 20% in the number of online transactions worldwide. In US there is an increase of 70% in online transactions.
WHO (World Health Organization) has advised using contactless payment methods over cash to fight against the pandemic.
The mobile applications which promote contactless payment play a crucial role in boosting the market. Since, in many countries there are not many contactless payment card holders, the smartphone as an alternate option helps in keeping the contactless transaction afloat.
In Turkey, there are about 75 million cards with contactless payment technology. It has witnessed 31 million contactless payments in first 2 weeks of March an increase of 23% compared to last month. Payments using smartphones has also seen 2.5-fold annual increase.
The Middle East and North Africa region has witnessed more than 200% growth in the contactless transactions.
Many public transit systems are looking at moving to EMV contactless payments, and getting rid of cash, paper tickets and closed-loop card/token-based system. Visa alone is currently engaged with more than 500 cities across the globe and in next 12 months, quite a few of these projects will be live.
In Latin America, ~80% of transactions are still carried out in cash, digital payments penetration was among the lowest globally.but,now things are changing at a rapid pace.
In Jan-May 2020, five countries in the region saw more than 30% of their transactions becoming contactless. Mobile wallets like PLIN and Yape — both powered by Visa’s payments technology have seen their user count grow past 1 million mark in Dec 2019-June 2020.
Visa is already cashing in on the opportunity and in June 2020, announced that it was working on a partnership with Facebook to help power the new payments feature on WhatsApp in Brazil.
US CONTACTLESS PAYMENT MARKET
USA has always lagged behind in the contactless payment option. Only 3% cards in US were supporting contactless payment. But, the current situation is expected improve the contactless payment market in USA.
US Federal Reserve has started setting aside the incoming currency from Asia to avoid the circulation for a period of 10 days in March 1st week.
Texas headquartered, global retail chain 7-Eleven is now quickly adopting to the evolving retail environment, and also eyeing the concept of a cashier-less store.
Airfield Supply Company – cannabis dispensary(with up to 1500 customers per day) partnered with cannabis POS platform to add Treez Pay Powered by Stronghold to its list of payment solution. California-based Island Pacific Supermarket grocery chain is now accepting contactless payment at each of its locations.
In July 2020, First Hawaiian Bank started to roll out of ‘tap and go’ contactless debit and credit cards to its customers.
EUROPE CONTACTLESS PAYMENT MARKET
About 75% of all Mastercard transactions in Europe support contactless payment technology. Mastercard to increase the payment limits in 29 European countries. Contactless payment limit was increased to $60 in UK. Cash usage in UK has dropped by half of what it used to be before the outbreak. In Germany more than half of the card payments made are contactless.
In June 2020, Wirecard collaborated with Stocard, to launch a new mobile payment feature in the Stocard app.Now, the 50 Million Stocard users will be able to make contactless payments in-store and online.
In July 2020, Carrefour France announced that it combined its customer loyalty programme with Apple Pay for use with Apple Wallet. This move will allow customers in France to use iPhones or Apple watches for contactless payment and also avail all benefits by the Carrefour loyalty programme.
Earlier in June 2020, BNP Paribas Electronic announced that a first batch of 10,000 and 15,000 Visa Premier biometric cards will be offered this fall. Among other banks, Crédit Agricole Touraine Poitou Regional Bank is planning to launch fingerprint payment cards at three regional banks before the end of 2020.
CHINA CONTACTLESS PAYMENT MARKET
China, unlike matured economies like Japan and U.S. has embraced the online payment like no other, almost bypassing the intermediate payment cards system.
Tencent backed Wechat and Alibaba backed Alipay comprise more than 90% of the$17 Trillion local mobile payments market. They pioneered digital merchant payments in early 2014.
The government has made sure the Chinese lenders disinfect the notes and also keep them in safe avoiding the circulation. This will lead to increase of adoption of contactless payment.
Earlier in April 2020, China rolled out its digital currency in four cities(Shenzhen, Suzhou, Xiongan and Chengdu), as a part of its move to become the world’s first cashless society. Franchisees of Starbucks, McDonald’s and Subway chains in China will test the national digital currency in the near future.
INDIA CONTACTLESS PAYMENT MARKET
Contactless payment was already growing at a rapid pace since Mid- 2018.The continued surge of COVID cases in the country has given it a further push which will continue in the foreseeable future.
At present, the limit for purchase amount is INR 2,000(~$27). The Associated Chambers of Commerce (Assocham) has urged Reserve Bank of India (RBI) to increase the contactless payment limit to Rs.5, 000. Major online retailers have stopped the Cash on Delivery mode which made up at least 40% business volumes.
India has already implemented FASTags(Electronic toll collection) across all 530 toll booths to minimize cash transaction between drivers and toll booth operators
GLOBAL CONTACTLESS PAYMENTS RECENT MARKET TRENDs
- Rubean, CCV in partnership with Intertrust and Riscure have launched a contact payment application. It supports PIN entry without additional hardware. Application is first to be launched in Germany.
- Mastercard in Middle East Asia and North Africa regions has increased the payment limit of contactless transaction
- In July 2020, Salamantex announced that 2,500 merchants in the country will be able to support three different crypto assets via the system in Austria. The three supported assets include ethereum (ETH) dash (DASH) and bitcoin (BTC)
- Mastercard is working with partners in transport domain to develop biometric authentication like gait/face recognition/heartbeat/vein biometrics, for a future payment system
- Union Pay from China is partnering with a bank in Kazakhstan to issue 100,000 contactless cards in the country.
- Curve, UK based firm has launched a new range of cards across Europe. It will be without primary account numbers on the face and shall be used mainly for ‘tap to pay’ transactions.
- Mexico based firm Clip has launched a new contactless payment system called “Clip Total”.
- Garanti BBVA has increased the limit on contactless payment on cards to 250 Tukish Lira.
- Mastercard has increased the contactless limit in Canada to $250.
- All new wristband models from Fitbit will feature contactless payment as standard option.
- Mastercard has increased the contactless payment limit in Australia from AU$ 100 to AU$ 200.
- Huawei Pay application is launched in Singapore to ramp up the usage of contactless payments
- Smartphones could also soon read contactless biometric cards directly, For example, an NFC applet for communicating with the card to conduct transactions based on the FIDO protocol
GLOBAL CONTACTLESS PAYMENTS MARKET SIZE AND FORECAST
With almost every country increasing the limit on card payment with contactless technology, it will increase the total transactions and as well as cumulative transaction amount.
“The global contactless payment market size is estimated at $1.9 Trillion in 2020 and estimated to grow at 26% CAGR till 2025.”
The mass rollout of contactless card and infrastructure will be the biggest growth driver.
The rise in various applications launched in countries help in more number of local cashless transactions. The smartphone way of payment is expected to drastically as it is a easier method in smaller stores.
GLOBAL CONTACTLESS PAYMENTS MARKET COMPETITIVE LANDSCAPE
Major vendors in the contactless transaction sector are Visa (US), Mastercard (US), Gemalto (Netherlands), Ingenico (France) and Bitel South Korea).
Infineon is among the market leaders in contactless technology to the market and considered it future of payments and earlier thought the cards will cease to exist in the short term. But now it believes cards will be a permanent fixture in the payment’s ecosystem. The reason is cards are still used more than ever, and it is the main interface between the bank and the customer.
Some of the mobile application which support smartphone method of payment are Google Pay, Paypal, Samsung Pay, Square Wallet and Apple Pay.
In July 2020, Fujitsu Frontech Ltd. and fintech company Soft Space Sdn. Bhd. entered into a memorandum of understanding (MOU) to jointly cooperate in order to boost the usage of contactless card payment in Japan. Earlier in May 2020, Japan`s JCB Co Ltd also leveraged Soft Space`s tech expertise to develop the Tap on Mobile programme that capitalises on the wide availability of Android smartphones equipped with NFC (near-field communication).
In June 2020, Mastercard and Xiaomi partnered to bring the Xiaomi`s contactless smartwatch payments to Europe. NXP’s cloud-powered mWallet 2GO and Near Field Communication chip will power Xiaomi’s new smartwatch.