J’son & Partners Consulting presents brief results of the research: Global Contactless Payments Market.
The share of contactless payments is yearly increasing in modern society. The efficiency, safety and speed are the “milestones” in modern economy. Contactless payments allow to make transactions fast without physical contact between POS-terminal and payment customer’s device. Besides, contactless payments can be processed much faster than payments with the use of Chip and PIN systems or standard cash transaction.
Despite the availability of new remote payment services, which operate via scanning of bar codes or QR codes for payment, majority of contactless transactions are being processed via NFC technology.
Besides banking cards with contactless payments technology, nowadays wide distribution are gaining payments with the use of mobile phone or other wearable devices. The use of contactless technologies allows to save time on clients servicing in different trading spheres, HoReCa (hotels and restaurants) and in public transport.
By MarketsandMarkets’ estimations, in 2014 the turnover of contactless payments in the world was around $4.9 bln and it will be close to $10 bln by 2018.
Market development and increasing contactless payments penetration correlate majorly with available infrastructure. According to Berg Insight’s estimations, in 2014 the number of installed POS terminals with NFC support increased for 71% and reached 21.4 mln devices, and by 2019 this number will reach 75 mln, which will correspond to yearly average growth rates at the level of 28.4%. According to J'son & Partners Consulting’s estimations, in Russia the number of POS-terminals with NFC was 25 thousand terminals in 2013, and it increased two fold at the end of 2014.
A lot of POS-terminals with NFC technology are not being used for processing such transactions. Due to Berg Insight’s estimations, only 9 mln POS-terminals processed contactless payments in 2014.
Contactless payments are being used in such spheres like transport and logistics, IT and telecom service, consumer goods and retail trade, government services, banking and financial institutions etc.
Mobile Contactless Payments Market
NFC technology allows to make contactless payments via smartphones and tablets, mainly with the use of hardware (SE – Secure element) and software (HCE – Host card emulation) solutions in the sphere of security.
According to Deloitte’s estimations, by the end of 2015, 5% of smartphones+NFC’s users will make contactless transactions in trade spots at least once in a month, while only 0.5% of users did this in the middle of 2014. Strategy Analytics forecasts, that the turnover of mobile NFC payments will hit $130 bln by 2020.
Currently there are three large market players of such payments: Apple, Google and Samsung with Apple Pay (launch of the system was on 20 October 2014), Android Pay (launch was in May 2015) and Samsung Pay (launch is expected this summer 2015). It is worth to specify that Samsung Pay system is using MST (Magnetic secure transmission) technology together with NFC, which allows the device to imitate general banking card.
Besides, API Google Wallet was implemented in the last versions of Android-system, which allows to create apps to make mobile payments not only via NFC but in the Internet as well.
According to the data of analytical agency ITG, by December 2014 around 1.7% of digital payments in the country were made since the launch of Apple Pay in USA
Safety of Mobile Contactless Payments
Secured module (SE) provides safety of such types of transactions – risk-free against chip break-ins, which is responsible for secure storage, making payment transactions and storage of confidential information. This chip stores information, manage security and provide the screen (Firewall) between NFC apps and other phone modules.
While using Host Card Emulation (HCE) technology, which allows to emulate banking card on the phone or tablet, secured module is virtual and is situated in the cloud.
HCE has open architecture, which allows to emulate not only banking cards, but also loyalty cards, transport cards, pass IDs etc. The technology makes possible to speed up the process of NFC services implementation, as there is no necessity to coordinate and agree actions with phones’ manufacturers, besides, many problems with comparability are being solved.
SE and HCE technologies differ a lot, each of them has its pros and cons. HCE allows not only to make payments via physical POS-terminals, as SE, but also make internet transactions on web-sites and apps, but its more “unsecure” towards virus software and requires the availability of internet connection.
Secured Module can be implemented in the following elements:
- SD card – memory card, which can be put in some phones as an addition to already existed SE/NFC functions;
- External device – in this case a stamp or connected to the phone device allows to use SE/NFC;
- Implemented device – SE/NFC is already installed in some phones;
- SIM – the addition of NFC function in the identification subscriber module;
- Cloud – software approach, which disconnect secured element form the device.
Detailed Results of the Research are Presented in the Full Version of the Report: Overview of the Global Contactless Payments Market
Example of Report’s Content
3. Overview of Technologies Used to Make Contactless Payments
3.1. Systems Working under ISO/IEC 14443 Standards
3.2. Systems, Operating by NFC Standards (ISO/IEC 18092:2013 and ISO/IEC 21481:2012)
3.2.1. Mobile Phones and Tablets
18.104.22.168. Hardware Solutions
22.214.171.124. Software Solutions
3.2.2. Other Devices
3.4. Other Contactless Payments Technologies
3.5. The Provision of Contactless Payments Safety
4. Overview of Global Contactless Payments Market
4.1. The Analysis of Largest Market Players Activity on the Contactless Payments Market by Segments
4.2. Estimation of Current Market State
4.3. Key Factors of Market Development
5. Overview of Russian Contactless Payments Market
5.1. Banking Cards
5.1.2. Turnover and Number of Transactions by Cards with NFC
5.1.3. Turnover Structure
5.2. Other (QR-Codes etc.)
5.2.1. Services Overview
5.2.2. Development Perspectives
This Information Note is Prepared by J’son & Partners Consulting, We strive to provide factual and prognostic data that fully reflect the situation and are available to us before issuing the material. J’son & Partners Consulting reserves the right to revise the data after publication of new official information by the market players.