Contactless payment cards offer an array of benefits to both the retailer and consumer, such as faster throughput at the Point of Sale (POS) terminal, potentially leading to increased sales and reduced operating costs from cash handling.
However, to succeed the contactless card needs the attendant payment infrastructure to be upgraded to support contactless transactions, thus requiring co-operation from the various stakeholders in retail payments.
Contactless Payment Market Development
According to the latest market study by Juniper Research, the number of OEM-Pay contactless users -- including Apple Pay, Samsung Pay, and Android Pay -- will exceed 100 million for the first time during the first half of 2017, before surpassing 150 million by the end of this year.
The combined market share of Apple, Samsung, and Google (via Android Pay), increased from 20 percent in 2015 to 41 percent in 2016, as a proportion of total mobile contactless payment users. Juniper forecasts that this will rise to 56 percent by 2021, as the trio’s combined user base exceeds 500 million.
The research found that Apple Pay and the alternative wallets are set to establish themselves as the primary contactless mechanisms of choice in the U.S. market. However, the challenge facing Apple and its rivals is to ensure that the infrastructure is in place for consumers to make in-store payments.
"We believe that as contactless usage gains traction and consumers or merchants recognize the speed and convenience it offers, then, as in European markets, there will be a further and significant increase in availability at the point-of-sale," said Nitin Bhas, head of research at Juniper Research.
Contactless Payments Growth Outlook
According to Apple, the proportion of U.S. retailers supporting Apple Pay rose from 4 percent in 2014 to 35 percent in late 2016. Plus, the future growth outlook is bright.
The research found that 2015 and 2016 were both watershed years for Host Card Emulation (HCE) in terms of commercial service deployments. Juniper estimates that at least 194 banks had introduced such services by the end of 2016.
Juniper expects that PayPal, already near ubiquitous in the online space, will likely deploy a portfolio of contactless payment and loyalty solutions that will allow it to compete effectively for market share.