The use of contactless point of sale (POS) terminal transactions is set to increase, but total value will remain low.
This is according to Juniper Research's recent study: POS Terminals: Market Strategies & Segment Forecasts 2016-2021.
The report says the global value of contactless POS terminal transactions, conducted in-store via cards, mobile and wearables, will approach $500 billion annually by 2017. This is up from an estimated $321 billion this year.
However, the low value nature of contactless payments means that it will only represent just 5% of the total value of all POS transactions in 2017, it notes.
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 a rise in migration to contactless payment, says the research.
For example, Visa announced more than 3.2 million contactless terminals in Europe as of April 2016, up 23% from 2.6 million at the end of April 2015, it says.
According to Juniper, contactless terminals now account for a significant minority of terminals in many regions (and a majority in several national markets). As of the end of 2015, there were 15.3 million, or nearly 20% POS terminals worldwide, it says.
The study notes these numbers will increase sharply over the next five years, with contactless accounting for more than two in three POS terminals by 2021.
The Smart payment association (SPA) says contactless payment growth is being driven by the sustained growth of smart payment cards that are being shipped with on-board contactless technologies. In some territories, like North Asia, tap-and-go functionality is now present on 82% of cards shipped by the SPA, it says.
Similarly, the number of contactless-enabled terminals is increasing, notes SPA. POS schemes mandating the activation of contactless functionality for cards and other devices are proliferating around the world - and paving the way for the next-generation of digital and mobile payments, it adds.
SPA points out contactless cards are more common in most developed countries. It reveals that 53% of all cards shipped in Europe in 2015 were contactless. Meanwhile, the data from Visa Europe shows that across Europe, there are now more than 130 million contactless cards accepted at more than 3 million contactless terminals.
However, the Juniper research points out 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, says Nitin Bhas, head of research at Juniper.
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