Contactless Payments to Reach $10 Trillion by 2027; Cash Transactions to Decline

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During the early stages of the COVID-19 pandemic, everyone maintained a safe physical distance from others for fear of contracting the disease. This paved the way for contactless payments, made through one’s smartphone, a contactless card, or online apps. Currently, the pandemic might be on its way out but contactless transactions are still the preferred payment mode for many people worldwide. And the share of no-contact payments continues to grow.

A new report from Juniper Research shows that contactless payments will have a collective value of around $10 trillion by 2027, up from $4.6 trillion in 2022. To support the sustained influx of cashless transactions dating back to the onset of COVID-19, establishments invested in contactless POS systems, payment gateway integrations, and other types of contactless infrastructure. These investments have been and will continue to drive the market in the next five years.

Given that there are 5.34 billion unique mobile phone users as of July 2022, mobile and wearable payments are set to climb by a staggering 221% from 2022 to 2027. These outpace the growth of contactless card transactions, slated to increase by 119%—also an impressive figure.

The segment with the biggest growth is contactless ticketing payments, which has a projected over 440% surge in the aforesaid period. This will be driven by the swift deployment of NFC ticketing systems across establishments, especially public transport networks.

The rapid acceleration of contactless payment solutions and mobile payment systems underscores the drive of global societies to go cashless even after the pandemic. In fact, these transactions have started to encroach on the spaces in which cash transactions have popularly been used. So, do many people still pay using bills and coins?

Decreasing Cash Payments

Despite the convenience afforded by contactless payment solutions, many shoppers in the United States still use cash but it has lost its spot as the most preferred payment mode. In a May 2022 survey by Business.com, it was revealed that 99% of people in the US pay using credit cards, 87% use cash, 78% use contactless payment apps, and 35 pay through personal checks.

The share of cash users may be huge but cash doesn’t come close to credit in terms of frequency of use. In fact, 73% of US consumers frequently use credit while 12% use cash. Contactless payment apps account for only 11% but Juniper Research’s report suggests that these will overtake cash soon and won’t look back afterward.

In addition, a study by Michigan State University (MSU) found that the share of cash payments decreased from 49% in 2020 to 38% in 2021. Meanwhile, cashless transactions jumped from 51% in 2020 to 62% in 2021.

The trends imply that many still use cash due to the absence or lack of credit card terminals and contactless payment infrastructure in some retail spaces. Many small stores, bazaars, food stalls, and transportation modes still primarily operate with cash. But cashless means are gradually penetrating these spaces, which is why non-cash transactions are on the rise. MSU’s data reveals that over two-thirds of all transactions won’t involve cash by the end of this year.

Furthermore, credit and other types of cashless payments favor stores in terms of sales. According to several reports, consumers typically spend more using credit and other cashless means than those who pay with cash. One even reveals that those who shop using credit spend up to 83% more. With this, brands and store owners have little incentive to solely rely on cash transactions.