The global contactless payment market size is expected to reach USD 4.68 trillion by 2027, according to a new report by Grand View Research, Inc. The market is anticipated to expand at a CAGR of 19.8% from 2020 to 2027. In addition to being spurred on by the COVID-19 pandemic, the contactless payments industry is expected to witness lucrative growth over the forecast period owing to innovations in technologies such as IoT, which acts as a major market driver in this sector.
Benefits such as a reduction in transaction time and improved service delivery offered by contactless payments have resulted in a significant rise in the number of users. Some other key features of the system include easy installation and cost-effectiveness. The rising trend of making payments through QR codes and mobile phones is expected to drive the demand. Individuals are increasingly using this mode of payment as it eliminates the need to carry cash.
North America is expected to emerge as one of the key regional markets over the forecast period. The growth is mainly attributed to the increasing deployment of cloud-based contactless payment technologies in various verticals, including transportation and retail amongst others. Europe is expected to be another major region for contactless payments owing to the growing number of smart card rollouts. Countries in the Asia Pacific region, such as Australia, Taiwan, and Japan, have witnessed a higher penetration rate of contactless payments compared to other countries.
The COVID-19 outbreak is expected to change the payment behaviour of firms and users as the World Health Organization has been advising consumers to avoid cash handling and switch to contactless payments. In addition, governments are taking initiatives to encourage the adoption of digital payments across their respective countries. For instance, Ireland’s Finance Minister has announced an increase from EUR 30 to EUR 50 in the spending limit via contactless payment methods. Furthermore, researchers found that the Bank for International Settlements is working on bringing potential architectures for accessible and resilient central bank operated payment infrastructures, such as retail Central Bank Digital Currencies, to allow broader acceptability. This pandemic may hence trigger various means of payments and spur the adoption of contactless payments worldwide.