Juniper Research: Contactless Cards Poised for Growth Surge in 2014 (Nov. 25, 2013)
While the future of widespread NFC payment adoption hangs in limbo, the number of contactless cards in circulation with simple tap-and-go payment technology will see a growth surge next year, according to new data from Juniper Research. Contactless cards worldwide will reach 249 million next year, up 72 percent from 145 million this year. But contactless cards still comprise a small fraction of all cards in circulation, and the number of merchants equipped with POS hardware to accept contactless cards remains relatively small, Juniper says. In the U.S., for example, Juniper data suggest less than 2 percent of retailers have contactless-enabled POS hardware.
Contactless payment is poised to surge in 2014 in certain regions, partly due to the worldwide migration to EMV card technology, Windsor Holden, Juniper research director and author of “Contactless Payment Cards: Market Prospects 2013-2018,” tells Paybefore. In Australia, where MasterCard requires merchants to have at least one contactless-enabled terminal beginning next year, about 60 percent of cards in circulation are contactless-enabled. In Poland, contactless cards have about 40 percent penetration and in the U.K. contactless cards comprise about 20 percent of all cards, according to Juniper’s data. Regions in Asia have pockets of high contactless card penetration, but elsewhere contactless card penetration is sporadic, Holden says, due to sparse contactless-enabled POS hardware.
As markets around the world gradually shift to the EMV chip-and-PIN card standard to comply with payment network liability-shift mandates, many retailers—but not all—are upgrading POS hardware to include contactless card readers, which could help drive further contactless card usage, Holden suggests. Liability-shift deadlines go into effect in the U.S. in 2015.
But like NFC payment, contactless card adoption still suffers from the lack of a compelling business model to drive contactless payment, Holden says. “Tap-and-pay is fundamentally a new behavior and to make people change you have to demonstrate benefits clearly throughout the whole payments ecosystem,” he says. As the movement to smartphone-based NFC payments has not yet ignited, concerns are growing about its future, Holden warns. “Apple’s failure to support NFC was huge; this is the company that educated people on how to download and use mobile apps. When Apple declines to pursue something like NFC, it doesn’t inspire confidence across the industry.”