Contactless Payments Market is expected to reach US$ 91.80 Billion by 2031

Contactless Payments Market Analysis: Key Insights 

According to our latest study on "Contactless Payments Market Global and Regional Share, Trends, and Growth Opportunity Analysis – by Payment Mode, Component, Deployment, and Industry Vertical," the contactless payments market was valued at US$ 33.27 billion in 2023 and is expected to reach US$ 91.80 billion by 2031; it is estimated to record a CAGR of 13.5% from 2023 to 2031. The rising adoption of smartphones and mobile devices and increasing approval of seamless and secure payment experiences drive the contactless payments market growth. However, high initial investment and maintenance costs for deploying and upgrading the hardware and software components hinder the growth of the market.

The Asia Pacific contactless payments market is segmented into China, Japan, South Korea, India, Australia, and the Rest of Asia Pacific. The region is expected to record the highest CAGR in the contactless payments market. Several factors such as the increasing demand for digital transactions, the rising penetration of smartphones and wearables, the growing e-commerce sector, and the rising digitization in various countries across the region drive the contactless payments market growth. Moreover, the COVID-19 pandemic has accelerated the adoption of contactless payment solutions, as people prefer to avoid physical contact and cash handling to prevent the spread of SARS-CoV-2.

Contactless Payments Market

Governments of various countries in Asia Pacific have been actively promoting digital payments and financial technology. They have implemented policies and initiatives to encourage the adoption of contactless payments. The region has witnessed rapid technological advancements, including the widespread availability of smartphones and mobile internet connectivity. These factors have facilitated the adoption of contactless payment solutions, particularly through mobile wallets. Payment providers, financial institutions, and technology companies in the region have formed strategic partnerships and collaborations to enhance the adoption and acceptance of contactless payments. In October 2023, Aurionpro Transit, a transportation fintech company based in Singapore, joined forces with Mastercard to introduce a cutting-edge contactless payment solution for public transportation, providing commuters with a contemporary and convenient mode of payment. This collaboration aims to enhance the overall commuting experience by leveraging the latest technology and enabling seamless transactions across the public transport network. These collaborations have expanded the reach and availability of contactless payment solutions.

The Asia Pacific contactless payments market growth is expected to expand further as more consumers and businesses adapt to the convenience, security, and speed offered by these payment methods. Also, the region's large population, increasing digitalization, and supportive government initiatives are likely to fuel the contactless payments market growth.

Increasing Demand for Digital Transactions Boosts Contactless Payments Market Growth

Digital transactions are the electronic transfer of money or data between two parties, such as customers and merchants, without the use of physical cash or paper documents. Digital transactions offer various advantages, such as convenience, speed, efficiency, security, and transparency. The demand for digital transactions is growing due to several factors such as the rising e-commerce sector, the trend of digitization in various countries, customers' preference for online shopping and payment, and the impact of the COVID-19 pandemic. Hence, the increasing demand for digital transactions drives the growth of the contactless payments market, as contactless payment is a suitable and secure method of making digital transactions using radio frequency identification (RFID) or near-field communication (NFC) technology without the need to swipe or enter a PIN. Contactless payment enables faster transactions and increased customer satisfaction and loyalty, as well as the adoption of new payment technologies, such as NFC and HCE, that facilitate machine-to-machine communication and IoT integration.

Contactless Payments Market: Segmental Overview

Based on component, the contactless payments market is segmented into hardware, solutions, and services. The hardware segment dominated the contactless payments market in 2023. The hardware component enables contactless payment transactions, such as smart cards, smartphones, PoS terminals, NFC chips, and host card emulation. The services segment includes consulting, integration and deployment, and support and maintenance services that help customers and merchants adopt and use contactless payment solutions effectively and securely. The solution segment is also expected to register the highest CAGR as the innovation and development of new contactless payment solutions, such as biometric authentication, tokenization, and cloud-based payments, are enhancing customer experience and loyalty. The services segment is also expected to grow at a significant rate, as the customers and merchants require professional assistance and guidance to implement and operate contactless payment solutions. The services segment also helps the customers and merchants comply with regulatory standards and security protocols, as well as troubleshoot any issues or challenges that might arise during contactless payment transactions.

Contactless Payments Market Analysis: Competitive Landscape and Key Developments

Infineon Technologies AG, Ingenico, Giesecke+Devrient GmbH, IDEMIA, CPI Card Group Inc., PAX Technology, SumUp Payments Pty Limited, Visa, Thales SA, and Mastercard are a few of the key companies operating in the contactless payments market. The market leaders focus on new product launches, expansion and diversification, and acquisition strategies, which allow them to access prevailing business opportunities.

• In February 2022, with Tap to Pay on iPhone, Apple enabled businesses of all sizes to accept contactless payments from customers using iPhones and a partner-enabled iOS app. It uses the Near-field Communication (NFC) chip built into newer iPhone models to read contactless credit or debit cards, Apple Pay, Apple Watch, and other digital wallets without requiring any additional hardware or terminals. Tap to Pay on iPhone provides a consistent and trusted payment experience to customers, as well as a secure and convenient way for businesses to manage transactions. Tap to Pay on iPhone also supports reading and issuing NFC-enabled loyalty cards, discount cards, and points cards in Apple Wallet.
• In September 2021, PayPal, Inc. launched a new all-in-one software called the PayPal app, which offers enhanced banking services to its customers. The new PayPal app aims to improve the customer experience by providing a single dashboard for all users’ accounts, a wallet page to manage payment methods, and other banking features. A few of the additional features of the new PayPal app are listed below:
  • Access to high-yield savings and crypto capabilities through the finance tab
  • A payments hub that includes send and receive money features, international remittances, charitable and nonprofit funding features, bill payment options, and a two-way messaging feature
  • A digital wallet that supports contactless payments using RFID or NFC technology, as well as QR code scanning, free cash rewards, and interest-free options
  • A protected and convenient way to shop online and offline, as well as to earn credit card rewards and points
  • Professional assistance and guidance to comply with the regulatory standards and security protocols of contactless payment transactions

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