Contactless Infrastructure, Services Spending to Reach $800 Million by 2011

"The benefits of contactless ticketing and payments have already been experienced in deployments and test trials around the globe, but a common infrastructure will fuel more rapid adoption," says Jonathan Collins, senior analyst at ABI Research.

Proprietary transportation ticketing, and open credit, debit, and e-purse payments tied to financial service networks are the primary drivers for contactless transactions. Contactless transportation ticketing dominated spending on contactless hardware, software and services in 2006, accounting for more than four times the expenditure in the banking market; however, by 2011 card issuers and other financial groups will be spending three times as much as transportation providers.

Both technology and business issues must be resolved before a single contactless infrastructure can be leveraged by card issuers and the emerging mobile phone contactless payment market.

Contactless commerce uptake is taking place at varying rates across regions, national markets, and market segments, as contactless payments are added to existing payment networks and environments. In North America, open system payments are driving contactless adoption, whereas in Europe contactless ticketing systems are the primary drivers.

"Already in both North America and Europe trial work is underway to allow bank-issued contactless payment cards to interoperate with contactless transportation systems, but significant work remains to be done," says Collins.

It is in Japan and South Korea that contactless technology is making the greatest headway, in part because contactless payments have been built on the foundations of contactless transportation ticketing with a large degree of interoperability between the two payment environments - albeit within the non-standards-based environment of Sony's FeliCa system.