Mobile card reader tech set to grow more than 50 percent by 2021
The global market for mobile card reader technology is set to increase by a compound annual growth rate (CAGR) of 54 percent from 2017 to 2021, according to new research from Technavio. The global mobile card reader market hit $5.88 billion in 2016 and is projected to reach $38.12 billion by 2021. Market value in the Americas hit $2.51 billion in 2016, and is set to expand at a CAGR of 50.86 percent.
Technavio’s hardware and semiconductor analysts credit three main components for this substantial growth: lower transaction costs, growing consumer dependence on credit and debit cards and an increasing number of micro, small and midsized enterprises (MSMEs) reaching a larger customer base, according to a company press release.
As more customers complete transactions using plastic or NFC systems, an increasing number of businesses have begun accepting payments via mobile technology such as the Square card reader. Magnetic stripe readers are the most commonly used form of mobile payments, at 53 percent, followed by 41 percent using chip-and-PIN technology, LowCards.com reported. More than 12 billion credit and debit cards were in circulation in 2016, which were used to complete 230 billion transactions.
Small businesses driving growth
For MSMEs, mobile card reader technology vendors offer terms that are more appealing than their traditional bank competitors, often with no required contracts. Where the traditional POS technology vendors require a contract and monthly or annual fees on top of the per-transaction fee of 2 to 3 percent, mobile providers charge a fixed fee, which averages $2 to $3 per transaction. Technavio noted that the low cost of magnetic stripe technology will virtually guarantee its continued dominance in the market in coming years.
“With governments across the globe looking to improve infrastructure in terms of the internet and mobile devices, the demand for contactless payment systems is also likely to improve. This will aid vendors to penetrate markets in India, China, Brazil and other developing economies, which are considered difficult to penetrate,” said Chetan Mohan, a lead analyst at Technavio for computing devices research.
TechCrunch has predicted that the number of mobile users completing payments with their devices will reach 70 percent in 2017, up from 39 percent in 2015 and 14 percent in 2014.