Wearables and smartphones are fuelling a boom in contactless POS transactions.
A new study from Juniper Research projects the global value of such terminal transactions, conducted in-store via cards, mobile and wearables, will approach US$500 billion annually by 2017. That’s more than 50 per cent up on the estimated $321 billion value this year.
However, despite such rapid growth, the low value nature of contactless payments means that it will only represent just 5 per cent of the total value of all POS transactions in 2017.
The research paper POS Terminals: Market Strategies & Segment Forecasts 2016-2021 concludes the surge in contactless-enabled POS terminals in 2015, allied to retailer obligations to card companies in many markets to ensure that all terminals will be contactless ready by 2020, is likely to prompt an upsurge in migration to contactless payment.
“For example, Visa announced more than 3.2 million contactless terminals in Europe as of April 2016, up 23 per cent from 2.6 million at the end of April 2015.”
Contactless terminals now account for a significant minority of terminals in many regions (and in a majority in several national markets) and, as of the end of 2015, numbered 15.3 million, or nearly 20 per cent of all POS terminals worldwide.
“These numbers will increase sharply over the next five years, with contactless accounting for more than two in three POS terminals by 2021,” Juniper reported.
The research pointed out that the frequency of contactless payments may indeed be limited in some markets.
“This is mainly due to the lack of widespread availability of supporting POS contactless reader terminals and also that some potential users are likely to remain cash-centric. For example, Germany remains a highly cash-centric economy, with cash still accounting for around 57 per cent of in-store retail transactions by value”, noted research author Nitin Bhas.
The report also projected that contactless cards will represent one in two payment cards in issue by 2020 and that smartphone and tablet-based mPOS terminals will handle 20 per cent of all retail POS transaction value by 2021.
The whitepaper, A Contactless POS Future, is available to download from the Juniper Research website together with details of the new research and interactive dataset.