Spurred by large card associations and banks, merchants, and wireless communications operators, overall spending on contactless payment hardware and software should reach $870 million by 2011, up from a modest $260 million in 2006, according to ABI Research in New York.

“Initial contactless payment deployments have already shown the ability to speed transactions and capture previously cash-only transactions for financial service networks,” a factor that will foster growth going forward, says Jonathan Collins, a senior analyst at ABI.

In fact, despite the current credit crunch, there are already more than 60 million branded contactless credit and debit cards issued in the United States, according to Mohammad Khan, president and founder of Santa Clara, California-based vendor ViVOtech, Inc. The company expects the number to reach 100 million by the end of the third quarter, which would represent 25 percent of the branded cards actively used in the United States. ViVOtech has already shipped nearly 500,000 contactless device readers to end users in 33 countries, and Khan believes the contactless payment implementation rate will continue to increase throughout 2009.

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