Contactless Payments: A Gateway to Digital Economy

 

Contactless payments are one of the emerging forms of digital payment technologies that allow consumers to pay for goods and services by using credit or debit cards. The primary technology used in contactless payment is RFRID i.e. radiofrequency identification also known as chip cards. Consumers do not have to swipe the card or enter personal identification number i.e. PIN, in order to commence the transaction. These types of payment systems often installed at point-of-sale terminals with a Wi-Fi-like logo though turned onto its side. The credit card industry is facing a transition period as it adjusts to new technology. As more people are using their debit cards and using contactless payments on the internet, credit card issuers are facing tough questions from consumers about their business practices. Some merchants will not accept contactless payments or charge high transaction fees for consumers who use such cards at their business locations. Others will charge consumers additional processing fees for accepting credit cards over their magnetic stripe cards.

Market Drivers

Growing penetration of smartphones in South America and Asia Pacific is expected to drive growth of the contactless payments market during the forecast period. According to the Indian Cellular and Electronics Association, India’s smartphone base is expected to reach 820 million by 2022. According to the same source, rural part of India witnessed around 35% year-on-year growth in smartphone penetration, while 7% growth in urban parts. Such high penetration of smartphones has led to increase in contactless payments. Hence, such factors are expected to drive growth of the contactless payments market during the forecast period. Moreover, increasing demand for biometric contactless smart cards in developed countries is expected to propel the contactless payments market growth over the forecast period.

Market Restraint

High cost of development and lack of consumer awareness is expected to hinder the contactless payments market growth over the forecast period.

Market Opportunity

Advent of 5G and advanced security features such as Blockchain can provide major business opportunities in the contactless payments market in the near future. Blockchain is a decentralized ledger that records digital assets.

Competitive Section

Major companies operating in the contactless payments market are Diebold Nixdorf, Giesecke & Devrient GmbH, PAX Technology, Heartland Payment Systems, Thales Group, Panasonic Corporation, PAX Technology, NEC Corporation, Titan Company Limited, and Toshiba Corporation.

For instance, in September 2020, Titan Company Limited partnered with the State Bank of India (SBI) to introduced Titan Pay powered by YONO SBI.