OEM Pay contactless transactions, driven by Apple Pay, Samsung Pay and Google Pay, will reach more than $1 trillion in 2022, finds Kaleido Intelligence.
This is up 377% from pre-COVID-19 levels in 2019 and will represent around 11% of total instore proximity transactions conducted via contactless and QR code payment methods.
According to Kaleido’s new report, The Future of Instore Retail Payments, OEM Pay transaction value grew 155% in 2020, following the impact of COVID-19. The global pandemic has had a significant effect on how consumers shop: while global instore retail sales declined by 7% in 2020, online sales increased by 9%.
However, instore offline purchases witnessed a substantial increase and acceleration of low-value basket purchases becoming contactless, contributing towards a 105% increase in instore contactless card and mobile payment transaction value in 2020.
The Rise of Contactless Payments in the US
While contactless payment has become de facto in most European markets, this has not been the case in the US. More recently, the US witnessed tremendous growth in overall contactless payments driven by falling issuance cost, wider merchant acceptance and growing consumer adoption. This was further accelerated, as in many other markets, by the ongoing Coronavirus pandemic.
“Despite lagging many global markets, the US looks set to scale contactless payment adoption and spend rapidly. With a strong OEM Pay customer base forecast to exceed 200 million in 2022, and significant growth in consumer adoption of contactless cards, Kaleido predicts that contactless transactions in the US will reach $1.6 trillion by 2022,” comments Nitin Bhas, Strategy & Insights Lead at Kaleido Intelligence.
QR Code Proximity Payments Declined 7% in 2020
Following a substantial fall in retail spend in China, Kaleido estimated that the global QR code-based proximity retail payments market declined by 7% in 2020 to reach just over $2.8 trillion. This is predicted to reach $3 trillion once again in 2023, driven by growth across new markets.
QR code payments have changed the face of instore retail payments in China and are rapidly gathering pace in South Asia, South-East Asia, Latin America and Africa. These markets are rolling out QR code payment standards in a bid to move towards becoming a digital-first society. Markets such as India will witness strong adoption, with annual transactions predicted to exceed $100 billion over the next few years.
Cash Transactions Fall by 15% in 2020
Meanwhile, there is a steep decline in cash usage, with markets such as China, the US, Australia, Denmark, Finland, and Sweden leading the way to become cashless societies. Global instore cash transactions were over $8 trillion in 2016, and has witnessed a steady decline since then, with 2020 representing the biggest fall of 15%.
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