Paul Thomen

Tuesday, 23 April 2013

Innovation in Payment Systems of Contactless Cards and Payments

Contactless payments are being promoted by payment providers without necessarily being demanded by consumers. Aimed at displacing cash, which is generally disliked by merchants and financial institutions due to the costs of handling it (inc. security), contactless payments face strong competition from increasingly popular chip and PIN debit card payments. Although contactless cards are the short term future for low-value payments, they will over time converge with mobile handsets.

Proclaimed as ‘the next big thing’ in the payments industry, there was a lot of media attention directed to the growth of contactless payments during the review period. From 2008 to 2012, the volume of contactless cards increased significantly from 220.0 million to 610 million. A large proportion of this growth was driven by the mass increase in the prepaid category, which enabled holders to load their cards with funds to make small payments.

Countries that recorded massive increases in card volumes were Poland, with a CAGR of 122.31%, France with 85.48%, Turkey with 69.48% and Canada with 63.87%. The volume of contactless cards is expected to reach 1.7 billion by the end of 2017 and, this growth, will mainly be driven by these countries as well as the UK.

UK card providers have been the most proactive in the region in terms of card issuance, with over 19.6 million contactless cards in circulation at the start of 2012. However, the majority of merchants in the UK have not been eager to upgrade their POS systems to enable contactless payments. Approximately 80,000 merchant outlets accept contactless payments in the UK, including convenience retailer Spar.

Consumer reaction to the technology has been mixed. In countries with young populations, like Turkey, the introduction of new technology is welcomed, while in more established and older markets, such as the UK, it has been greeted with some trepidation.  However, early adopters of contactless payments are positive about its use, and there is little doubt that financial providers will continue to follow their development with increasing interest.

Reasons to buy

- Receive information to aid you in making strategic business decisions using historic and forecast market data related to the contactless payments market.
- Gain an understanding of the key market trends and growth opportunities within the contactless payment market in various regions of the world.
- Assess the competitive dynamics in the global contactless payments market.
- Gain an insight into the marketing strategies adopted by key players globally in order to increase the volume of contactless payments.
- Uncover insights into the key regulations governing the contactless payments market all over the world.

Table of Content

1 Executive Summary
2 The Global Future of Contactless Cards and Payments
3 Global Snapshot of Contactless Payments
3.1 Emergence of Contactless Payment
3.1.1 Product launches
3.1.2 Trials and pilots
3.2 Global Market Size and Outlook
3.2.1 Benchmarking contactless market opportunity
3.2.2 Market opportunity
3.3 The Technical Side of Contactless Payments
3.3.1 Emergence of contactless stickers for mobiles that lacks NFC technology
3.3.2 Contactless payments – such as closed loop, transport schemes
3.3.3 Worldwide contactless card schemes
4 Analysis by Region – the Americas
4.1 Introduction
4.2 Market Size and Analysis of Contactless Payments
4.2.1 Overview
4.2.2 Market size by card type
4.3 Key Trends and Drivers
4.3.1 Infrastructure drivers
4.3.2 Business drivers
4.3.3 Consumer preference
4.4 Regulatory Framework
4.4.1 Regulations on debit card interchange fees and the Durbin Amendment in the US
4.4.2 Involvement of NFC mobile payment in code of conduct rule for Canadian payment card
4.4.3 Anti-money laundering legislation in Brazil cards and payments industry
4.4.4 The SBIF requires the following standards with respect to issuance of debit cards in Chile
4.5 Case Studies
4.6 Challenges
5 Analysis by Region – Europe
5.1 Introduction
5.2 Market Size and Analysis of Contactless Payments
5.2.1 Overview
5.2.2 Market size by card type
5.3 Key Trends and Drivers
5.3.1 Infrastructure drivers
5.3.2 Business drivers
5.3.3 Consumer preference
5.4 Regulatory Framework
5.4.1 Mobile Contactless SEPA Card Payments Interoperability Implementation Guidelines (MCP IIGs)
5.4.2 UK Card Association increases the contactless limit on debit and credit cards goes up to GBP20
5.4.3 Prepaid cards regulation in the UK restricts the entry of new players
5.4.4 Stringent card issuing regulation in Turkey presents challenge for card issuers in Turkey
5.4.5 Central Bank initiative to reduce interchange fee will positively impact card use in Poland
5.5 Case Studies
5.6 Challenges
6 Analysis by Region – Asia-Pacific
6.1 Introduction
6.2 Market Size and Analysis of Contactless Payments
6.2.1 Overview
6.2.2 Market size by card type
6.3 Key Trends and Drivers
6.3.1 Infrastructure Drivers
6.3.2 Business drivers
6.3.3 Consumer preference
6.4 Regulatory Framework
6.4.1 Government support has been important in other regions
6.4.2 The regulations on Japanese Payment Services Act (PSA)
6.4.3 Regulations of prepaid payment instruments including contactless cards
6.4.4 Revised eligibility requirements for credit card issuance in Malaysia
6.5 Case Studies
6.6 Challenges
7 Appendix
7.1 Methodology
7.2 Definition
7.3 Background
7.4 Contact Us
7.5 About Timetric
7.6 Disclaimer

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