What to Expect from the Contactless Ticketing Market over the Next 5 Years

After Subscriber Identity Module (SIM) cards, payment cards, and government identities, the contactless ticketing market is the fourth largest smart card market in terms of annual issuance volumes globally. This makes the market one of strategic and significant importance to the smart card vendor ecosystem.

The contactless ticketing market is also highly competitive, fragmented, and extremely cost sensitive. At the same time, mobile continues to grow in adoption and usage, placing a growth cap on the market. General inflationary pressures, alongside the memory shortage, are expected to place further strain on supply chains, cost bases, and, ultimately, supplier margins.

In 2025, global contactless ticketing shipments hit 341 million units, representing a Year-over-Year (YoY) decline of -12% YoY. Moving to 2031, the market is forecast to grow to 391 million units, representing a cautious market capable of achieving an average YoY growth rate of between +2 and +3% annually.

The decline in 2025 is not representative of an overall declining market, but illustrative of a year impacted by two primary factors:

1. High levels of ticketing issuance in 2024 driven by the Paris Olympics, which was not repeated in 2025.
2. A continuation of high inventory levels persisted, dampening demand for new orders as transportation authorities worked through existing stock.

Moving into 2026, the market is on track to return to growth levels, achieving low single-digit YoY growth compared to 2025. By the end of 2026, inventory levels are expected to have normalized, making 2027 the year for stabilization. This milestone year will demonstrate the recovery of the market with shipment volumes commensurate with 2023.

For the forecast period ending 2031, the market is expected to continue at steady post-2027 volumes without major further declines, and without significant acceleration in growth.

One of the primary reasons for skepticism toward acceleration is the continued rise in digital solutions, driven by project expansion (including France) and up-and-coming projects (including OVP in the Netherlands). Although digital will grow faster, it is not expected to replace physical tickets. It is a factor that will translate into a growth cap for physical tickets, thus the low single-digit growth predictions annually.

Globally, inflation has been stubborn and sticky, and there is no doubt that it will persist in the short to mid-term. Paired with this is the potential knock-on impact from the memory shortage, which when combined with general inflationary pressures will put significant strain on supply chains, costs bases, and bottom lines.

Combined, these two impacts will place significant pressure on pricing and margins as raw materials, labor, energy, and transportation costs all increase, and smart card manufacturers are already seeing component price increases.

The memory shortage is a significant impact requiring ongoing monitoring as it develops. It will likely endure until at least 2028 as foundries begin to prioritize higher-end nodes, which could strain lower-end silicon capacity (used in applications including contactless ticketing) and thus supply, increasing the potential risk of a chip shortage repeat.

Although the potential knock-on impact from the memory shortage remains a key ecosystem concern, to date, there is no clear evidence that increased ordering is beginning to take place in the contactless ticketing market. However, the risk must be considered that definitive industry evidence of panic buying/sourcing would be obfuscated by a continuation of high inventory levels, which are not expected to normalize until the end of 2026. Therefore, the industry will not likely understand the totality of any memory shortage impact (assuming there is a significant one) until 2027 at the earliest.

In terms of pricing increases, current market expectations are that any uptick will remain minimal and the possibility to pass on increased costs to transit authorities is negligible due to the cost-sensitive and competitive nature of the market, as well as long contract cycles.

This new fluid pricing environment (which will likely remain until 2028) will require continuous monitoring to help manage customer and contract impacts requiring transparent and honest communication between supplier and customer to ensure supply and pricing continuity.