Contactless payments have become increasingly popular, fueled by the rise of mobile and digital wallets and the demand for touch-free options during the COVID-19 pandemic.
As more people adopt this technology, it's clear that contactless payments are not just a trend but a significant shift in how we handle financial transactions.
This article highlights key statistics and projections for the contactless payment industry in 2024.
Data Sources And Methodology
This article combines open-access resources and proprietary data to present accurate, up-to-date statistics and trends on contactless payment. Our methodology involves:
Aggregating data from government databases, industry reports, and academic publications
• Incorporating exclusive insights from leading industry providers
• Regular updates to reflect the latest information
Key data providers include:
Key Takeaway
- The global contactless payment market was estimated at $34.55 billion in 2021 and is expected to grow significantly over the next decade.
- Most digital wallet users access these services via smartphones (68%) and smartwatches (41%)
- 47% of Americans say they spend more money when using digital wallets compared to traditional payment methods.
- 51% of people say they would stop shopping with a merchant that doesn’t accept payments from digital wallets.
Overview of Contactless Payment
Contactless payments emerged in the early 2000s, driven by advancements in Near Field Communication (NFC) technology and the growing demand for faster, more convenient payment solutions.
This method allows consumers to make transactions by simply tapping their card or mobile device near a point-of-sale terminal, eliminating the need for physical contact.
Since its inception, contactless payments have seen remarkable growth, with global transaction volumes projected to hit $15.7 trillion in 2024. (Juniper Research)
Today, the contactless payment market is characterized by widespread adoption, with over 80% of retailers utilizing contactless payment methods as of 2021 (Stripe).
Major players in this space include Visa, Mastercard, and various digital wallet providers, such as Apple Pay and Google Pay.
The increasing preference for cashless transactions and the shift towards digital payments continue to shape its trajectory.
As of the second half of 2022, 53.8% of all card-based payments in the euro area were contactless (Data ECB), and projections indicate that digital wallets will become the most popular online payment method by 2024.
Contactless payments play a crucial role in the rising financial market, making it a key area of focus for businesses and consumers alike.
Key Statistics
The global contactless payment market was estimated at $34.55 billion in 2021 and is expected to grow significantly over the next decade. (Grand View Research)
The market is projected to expand at a compound annual growth rate (CAGR) of 19.1% from 2022 to 2030 (Grand View Research).
The market is expected to reach $164.15 billion by 2030. (Grand View Research)
Another resource estimated the contactless market to be $15.2 billion in 2023 and is expected to reach $38.1 billion by 2032 at a CAGR of 10.4% (2024-2032). (Imarcgroup)
47% of Americans say they spend more money when using digital wallets compared to traditional payment methods. (Forbes)
51% of people say they would stop shopping with a merchant that doesn’t accept payments from digital wallets. (Forbes)
Most digital wallet users access these services via smartphones (68%) and smartwatches (41%). (Forbes)
Over 70% of people said they would make digital wallets their primary method for shopping, while another 62% said they would for travel. (Forbes)
Men are 22% less likely to choose contactless payments than women. (Take Payment)
Major trends in Contactless Payment
73% of millennials and 66% of Generation Z are embracing contactless payment methods. (Market US)
The contactless payment market is heavily influenced by younger consumers, with 73% of millennials and 66% of Generation Z embracing these methods. (Market US)
This demographic shift indicates a strong inclination towards digital solutions, as younger generations prioritize convenience and speed in their purchasing experiences.
Tap-and-pay transactions to increase by 150% in 2028.
The tap-and-pay method is rapidly gaining traction, with the global value of transactions via digital wallets expected to increase by over 150% by 2028 (Consumer Finance).
This trend is significant as it reflects a shift towards convenience and speed in payment processing, enhancing the overall customer experience. With nearly 99% of smartphones projected to support contactless payment capabilities by 2027, the prevalence of tap-and-pay technology is set to redefine consumer interactions at checkout points. (Digipay Guru)
Tap-to-Mobile Technology Enabling Contactless Payments on Any NFC-Enabled Smartphone
Tap-to-mobile technology allows consumers to make payments directly through the merchant's phone using a contactless card or mobile wallet, enabling small businesses without traditional POS systems to accept contactless payments.
Companies like Mastercard and Visa have introduced initiatives called Tap on Phone and Tap to Phone, respectively, to facilitate this technology.
Visa already reported that tap-to-mobile transactions on its platform grew by 30% in 2021, and shipments of these mPOS terminals are expected to reach 32 million by 2026. (Exploding Topics)
Integration of Biometric Payments Gaining Traction, Expected to Reach 1 Billion Users by 2025 (Biometric Update)
Biometric payment methods, including fingerprint scanning and facial recognition, are gaining traction as consumers prioritize security and convenience in their transactions.
This trend is reshaping the payment industry, offering enhanced protection against fraud—a mounting concern in the digital era.
Industry projections underscore the significance of this shift, estimating that biometric payment systems will reach 3 billion users globally by 2026, with transactions totaling $5.8 trillion in value. (JP Morgan)
This rapid adoption highlights the growing preference for advanced authentication methods in the changing world of digital payments.
Contactless Payments Dominate in the Hospitality Industry, with 65% of Businesses Prioritizing Tap-to-Pay in 2024 (Global Payments)
In the hospitality industry, tap-to-pay will be the most important payment method for hotel organizations in 2024, with 65% of hospitality and accommodation businesses planning to prioritize this payment method.
The convenience and speed of contactless payments are particularly appealing in the hospitality sector, where customers often have limited time and desire a frictionless checkout experience.
By prioritizing tap-to-pay, hospitality businesses can meet their customers' rapidly changing payment preferences and streamline the payment process.
Increased Adoption of QR Code Payments in the US is expected to grow by 16 million Users in 2025 (Statista)
QR code payments are gaining significant traction, with projections indicating that the number of users will grow by 16 million in 2025.
This trend is driven by the simplicity and convenience QR codes offer, allowing consumers to make payments quickly by scanning a code with their smartphones.
The surge in QR code usage is significant as it provides a contactless payment option that is easy to implement for both consumers and merchants, especially in markets where traditional card payment infrastructure may be lacking.
Countries like China have already seen widespread adoption, setting a precedent for other regions.
Key Challenges Facing the Contactless Payment Industry
High Implementation Costs Affecting Adoption Rates
The initial costs associated with adopting contactless payment systems can be significant for businesses.
Many merchants need to invest in new hardware, such as terminals and scanners, and may also face higher processing fees for contactless transactions.
This financial burden can deter smaller businesses from transitioning to contactless solutions, limiting the overall growth of the industry.
Security and Privacy Concerns Persist
Security remains a critical challenge for the contactless payment industry, with 40% of U.S. internet users citing digital security as a primary concern for online transactions. (WIfi Talent)
Consumers worry about the risks of fraud, theft, and unauthorized access to their personal and financial information.
This ongoing concern can undermine consumer trust, which is essential for the widespread acceptance of contactless payments.
Lack of Consumer Awareness and Understanding
Despite the growth in contactless payment adoption, many consumers remain unaware of how these systems work.
A significant portion of the population, particularly older generations, may prefer traditional payment methods due to unfamiliarity with contactless technology.
Research shows that approximately 60% of consumers are still hesitant to use contactless payments due to a lack of understanding of the technology and its benefits. (Philadelphia Fed)
This gap in knowledge can hinder adoption rates and necessitates targeted educational efforts by financial institutions and payment providers.
Integration Challenges with Existing Systems
Integrating contactless payment solutions with existing business systems can present technical difficulties.
Many merchants face compatibility issues with their current point-of-sale systems, which can disrupt the checkout process.
These integration hurdles can create friction in the customer experience, discouraging businesses from fully embracing contactless payment options.
Regulatory and Compliance Issues
The contactless payment industry must navigate a complex sector of regulations and compliance requirements, which can vary significantly by region.
Non-compliance with data protection laws can result in legal penalties and reputational damage.
Ensuring compliance is essential for the sustainable growth of the contactless payment market, as businesses must prioritize adherence to local laws and standards.
Emerging Opportunities in the Contactless Payment Industry
Surge in Contactless Payment Adoption, Projected to Reach $10 Trillion by 2027.
The global contactless payment market is expected to reach an estimated transaction value of $10 trillion by 2027, driven by increasing consumer preference for fast and secure payment methods. (Juniper Research)
As consumers increasingly seek frictionless payment experiences, businesses can capitalize on this trend by adopting and promoting contactless payment solutions to enhance customer satisfaction and streamline transactions.
Integration of Emerging Technologies, Including AI and Blockchain
The integration of advanced technologies such as artificial intelligence (AI) and blockchain presents significant opportunities for the contactless payment industry.
The use of blockchain technology can improve transaction security and transparency, addressing consumer concerns about fraud.
As these technologies continue to evolve, they will create new avenues for innovation and efficiency within the contactless payment ecosystem.
Expansion of Mobile and Wearable Payment Solutions
Mobile payment adoption is projected to reach $408.96 billion by 2029.
Indicating a growing preference for contactless transactions via smartphones and wearable devices.
This trend is particularly significant as more consumers embrace the convenience of making payments directly from their devices.
The rising demand for wearable payment solutions, such as smartwatches, is expected to create new market opportunities for businesses to engage with tech-savvy consumers and offer seamless payment experiences.
Growth of Cashierless Checkout Systems in Retail
The implementation of cashierless checkout systems is gaining momentum.
This system allows customers to complete purchases without traditional checkout processes, significantly reducing wait times and enhancing the shopping experience.
As retailers continue to adopt cashierless solutions, there is a substantial opportunity for payment providers to develop and offer integrated systems that support these innovations, ultimately driving customer loyalty and repeat business.
Increased Focus on Customer Experience and Engagement
As payment technology evolves, businesses are increasingly prioritizing customer experience and engagement.
The introduction of gamified payment experiences and personalized loyalty programs can enhance consumer interaction during the payment process.
Research indicates that companies focusing on improving customer engagement through innovative payment solutions can see a significant boost in sales and customer retention.
By leveraging these strategies, businesses can differentiate themselves in a competitive market and foster long-term relationships with their customers.
Expansion of Contactless Payment Acceptance in Diverse Industries
Contactless payment acceptance is expanding across various sectors, including hospitality, transportation, and healthcare.
For example, 65% of hospitality businesses plan to prioritize tap-to-pay methods in 2024, indicating a strong shift towards contactless solutions in this industry. (Global Payments)
This trend presents opportunities for payment providers to tailor their offerings to meet the specific needs of different sectors, facilitating smoother transactions and enhancing operational efficiency across diverse business environments.
Impact of Contactless Payment Market Behaviour on Stakeholders
The major contactless payment trends are having significant impacts on different groups, as evidenced by the following data:
Consumers
Consumers are experiencing increased convenience and security due to the proliferation of contactless payments.
Technologies such as Near Field Communication (NFC) and mobile wallets (e.g., Apple Pay, Google Pay) have made transactions quicker and more seamless.
Adopting biometric authentication, like fingerprint and facial recognition, further enhances security while maintaining ease of use.
In 2024, mobile wallet adoption is expected to accelerate, driven by integrating payment features in wearables and other accessories, offering consumers more flexibility and speed in their transactions.
Businesses
Businesses are seeing a boost in efficiency and customer satisfaction as contactless payment options become the norm.
The adoption of modern Point-of-Sale (POS) systems is expected to grow at a compound annual growth rate (CAGR) of 8.3% from 2023 to 2030, reflecting the resurgence of in-person commerce post-pandemic. (Grand View Research)
This trend also leads to more integrated and omnichannel experiences, crucial for retaining customers and driving sales.
For businesses, the shift to real-time payments and enhanced data security measures is crucial for improving cash flow and reducing fraud risk.
Investors
For investors, the contactless payment trend presents both opportunities and challenges.
The rapid growth in this sector is driving fintech companies to expand their service offerings, including embedded payments and diversified financial solutions.
However, the high interest rate environment is pushing these companies to prioritize profitability, which may lead to a more selective investment industry.
As contactless payments continue to evolve, particularly with the integration of cryptocurrencies and blockchain, investors need to focus on companies that are innovating responsibly and adapting to the changing regulatory environment.
Conclusion
The growth of contactless payment has been remarkable. The industry has significantly transformed from traditional cash and card transactions to today's tap-and-go systems.
It is characterized by the widespread adoption of Near Field Communication (NFC) technology and mobile wallets, which sets the stage for tomorrow's innovations.
Current data indicates a continued surge in contactless transactions globally, suggesting that cash may become increasingly obsolete in many markets. This trajectory underscores the importance of robust cybersecurity measures and seamless integration across various payment platforms.
As we stand at this crossroads, one thing is clear: the future of contactless payment will be shaped by those who prioritize user convenience while maintaining the highest standards of security and privacy.
FAG
What country uses contactless the most?
Australia is currently the leading country in using contactless payments, with 92% of face-to-face Visa transactions utilizing this method as of September 2023. (Visa)
The United Kingdom follows closely, experiencing a 97% increase in contactless transit transactions, largely driven by its extensive transport network. (Visa)
Other notable countries include Norway, where three out of four transactions are settled contactless, and China, which had a pre-pandemic contactless payment ownership rate of 90%. (Expert Market)
What industries are leading the adoption of contactless payments in the U.S
The merchant industries leading the adoption of contactless payments in the United States are eateries, gas stations, and grocery stores. These industries have grown their contactless usage significantly between 2020 and 2023, and currently make up the majority of contactless transactions in the U.S.
Some key statistics:
- Eateries, gas stations, and grocery stores are the top industries driving the adoption of contactless payment in the U.S.
- These industries have seen the highest growth in contactless usage between 2020 and 2023.
- They currently account for the largest share of total contactless transactions in the country.
Why is contactless payment better than cash?
While cash still has its place, especially for privacy and in areas with limited technology, contactless payments offer significant benefits in many situations.
Contactless payment offers several advantages over cash:
- Speed: Transactions are much faster, typically taking just seconds to complete.
- Convenience: No need to carry or count cash or worry about having the right change.
- Hygiene: Reduces the need to handle physical currency, which can carry germs.
- Security: Carrying cash reduces the risk of theft or loss. Many contactless systems have built-in fraud protection.
- Tracking: It is easier to monitor spending and maintain financial records.
- International use: Often more convenient for travel than carrying foreign currency.
- Integration with rewards programs: Many contactless payment methods link to loyalty programs.
- Environmental impact: Potentially reduces the need for producing and transporting
- Accessibility: Can be easier for people with certain disabilities to use.
- Digital integration: Seamlessly works with online and mobile banking services.
What are the security concerns that users should be aware of?
Loss or Theft of Devices
Contactless payments typically do not require a PIN or signature for transactions, which means that someone else could use a card or mobile device to make unauthorized purchases if a card or mobile device is lost or stolen.
Although many card issuers offer fraud protection, the ease of use can lead to potential financial losses before the cardholder reports the theft.
Electronic Pickpocketing
There are concerns about "electronic pickpocketing," where thieves use NFC readers to skim data from contactless cards.
While the risk is relatively low, unauthorized readers can still capture limited information, such as account numbers and expiration dates, if they are close to the card.
Relay Attacks
Relay attacks involve intercepting the communication between a contactless card and a payment terminal. This requires the fraudster to be close to both the card and the terminal, but it can allow unauthorized transactions if successful. Future technologies may need to incorporate additional security measures to combat this risk.
Data Privacy Concerns
Contactless payment systems collect significant amounts of user data, which raises privacy concerns. This data can potentially be accessed by malicious actors through malware or phishing attacks, leading to identity theft or financial fraud.
Vulnerability to Phishing and Social Engineering
Fraudsters may impersonate legitimate entities to trick users into providing sensitive information. This is a broader concern that affects all digital transactions, including contactless payments.
Inadequate Security Measures by Merchants
Small and mid-sized businesses may lag in implementing robust cybersecurity measures, making them more vulnerable to attacks that exploit contactless payment systems.
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