Technology | Media | Telecommunications

Thursday, November 28, 2013

Exploring the Upside for Contactless Payments in 2014

Over the past five years contactless payments have emerged as a means by which both retailers and network operators can gain tangible benefits. This advantage comes from reduced operating costs and increased sales -- with greater consumer throughput at the point of sale (POS) terminal.

Juniper Research has found that 249 million cards will be used for contactless payments in 2014, driven by the global migration to EMV (Europay, MasterCard, Visa) standards-based CHIP & PIN and rising contactless infrastructure at the point of sale.

According to the latest global market study by Juniper, growth in usage will initially be driven by early adopter markets such as Australia, Canada, Poland and the UK.

In the medium term, user numbers will be enhanced by substantial adoption in the U.S. market following the mandated transition from magnetic-stripe cards.


Juniper observed that growth in the UK had been bolstered by ticketing as well as retail usage, with more than 3.5 million London bus journeys paid for via contactless payment cards since November 2012.

It also highlighted the strong retailer proposition offered by contactless, with faster throughput at checkout, reduced cash handling and increased customer retention allied to an opportunity to use contactless as a mechanism for greater consumer engagement in the form of loyalty cards.

However, Juniper has cautioned that despite recent deployments, contactless POS terminals still accounted for a small minority of the total in nearly all markets -- meaning that opportunities for usage were still severely constrained.

"We're still at a comparatively early stage in the consumer contactless journey. Awareness of -- and confidence in -- the technology needs to increase substantially before we move to true mass adoption," said Dr Windsor Holden, research director at Juniper Research.

Other findings from the market study include:
  • Growth is being fuelled by increased contactless transaction limits in key markets.
  • Where multiple contactless cards are presented in a wallet at a card reader, it is possible for the wrong card to be charged.