NEW YORK, Sept. 26, 2016 /PRNewswire/ -- Reportlinker Review is a series of posts featuring Innovations, Social and Economic Megatrends to understand the World of Tomorrow. Each post is illustrated with statistics for one industry.
Reportlinker Review in a nutshell
- More merchants adding contactless payment options
- Some people still leery of fraud
- Barclays adds payment sticker to smartphones
How is the market ?
Contactless payments are increasing rapidly as merchants add payment terminals and customers use more smart devices. This year, the market is forecasted to reach $6.7 billion, according to MarketsandMarkets. In five years, the market will reach $17.6 billion, growing at a compound annual growth rate (CAGR) of 21.2%.
The sector using contactless payments at the highest rate is healthcare followed by professional services.
Europe will hold the largest market share this year, but Asia-Pacific is forecasted to grow at the fastest rate by 2021.
In the UK, one in five credit or debit card payments is contactless. Adoption, however, has been slow, taking nearly a decade. During the first six months of the year, contactless payment rates exceeded all of 2015, reaching 1.1 billion transactions.
Contactless payments reached 18% of sales in June, the last month date is available. Seven months prior, the rate had been 10% and a year ago it was 7%.
Most contactless purchases were for public transportation and food or beverages. UK Cards Association expects the number of contactless payments will continue to increase.
Mass adoption, though, faces two challenges: Customers' concerns and merchants.
More than half of Britons fear fraud, some going to great lengths to protect their cards from being stolen using a card-reading devices. This fear was made worse when a 2015 investigation by The Guardian found that cards can work in contactless payment terminals for months after they have been deactivated.
In 2015, losses from contactless cards was $3.6 million, a figure Financial Fraud Action UK considers low.
There also is concern contactless cards will soon become obsolete as more people use smartphones and other devices to make purchases.
Banks and retailers also have slowed contactless card adoption by the general population by not adopting the technologies themselves.
For example, HSBC and Nationwide have issued debit cards but not credit cards with contactless payment technology, and Sainsbury's, the UK's second largest grocery store chain, has yet to install payment terminals.
Barclays has partnered with a smartphone-case manufacturer to offer a contactless payment NFC stickers for most smartphone models.
The sticker would allow customers to check out by tapping their phone on a contactless payment terminal. Tapping would take the user to a mobile wallet, and payment can be made using debit or credit card.
Critics say Barclays mobile wallet works exactly like Android Pay and Apply Pay, which smartphone users already have access. Barclays, however, has a history of being the last major banking institution in the UK to adopt third-party payment methods.
Purchases can be made up to $38.94.
- Between 2010 and 2013, contactless payments reached 552 million cards globally, growing at a CAGR of 38.4%.
- Recently, the number of cards surpassed 1 billion. The market grew at a CAGR of 72.3% between 2013 and 2016.