The “Global Powered Smart Card Market, by Type (Contactless Cards, Hybrid Cards, and Dual- interface Cards), by Application (Government, Healthcare, Transportation, Telecommunication, Financial Services, Retail, and loyalty, Pay TV, and Energy and Utility (Smart Meters for Electricity, Water, and Gas)), and by Geography (North America, Europe, Asia Pacific, Latin America, and Middle East & Africa) - Global Forecast to 2027”, was valued at US$ 4,406.1 million in 2019, witnessing a CAGR of 52.0% during the forecast period (2019-2027), as highlighted in a report published by Coherent Market Insights.
Smart cards are physical electronic authorization devices that find applications in providing control access to a resource. It is typically a plastic credit-card with an embedded integrated circuit (IC) chip. Smart cards primarily act as a cost-effective device to store, manage, and maintain credentials for end-users. Portability of smart cards facilitates their extensive utilization across various applications. Some include government (Identity Proof, Security Proof, and Identification Purposes), telecommunication (SIM & Universal Integrated Circuit Card [UICC]), and banking (Credit, Debit, and e-Commerce Cards). There are three types of smart cards namely hybrid smart cards, dual smart cards, and contactless smart cards.
The global XYZ market was estimated to account for US$ 4,406.1 Mn in terms of value by the end of 2019
Cost-saving offers and schemes from payment brands such as Visa Inc. and MasterCard are expected to propel the global powered smart card market growth during the forecast period
EMV chip technology incorporated in credit and debit cards offers various benefits including enhanced security features and lucrative saving schemes for merchants who deploy EMV terminals at their stores. Payment companies such as Europay, Visa Inc., and MasterCard are focused on ensuring contactless card payment terminals that can be deployed at merchant stores. For instance, in October 2015, MasterCard offered the U.S. merchants up to 100% discount from ADC calculations, if more than 95% of their annual MasterCard and Maestro transactions were generated from EMV terminals having EMV contactless and EMV contact functionality. Moreover, in October 2013, MasterCard offered an additional 50% discount within the account data compromise (ADC) calculations for both Fraud Recovery (FR) and Operational Reimbursement (OR) to merchants. This was applicable only when more than 75% of their annual MasterCard and Maestro transactions were generated from EMV terminals with EMV contactless and EMV contact functionality. Hence, lucrative saving schemes are expected to support the global powered smart card market growth in the near future.
Supplementary initiatives the government to promote use of powered smart cards are expected to present major growth opportunities in the near future
Governments of various countries are encouraging the use of powered smart cards, owing to the advantages offered such as enhanced security and convenient use. Government and regulatory authorities are taking proactive initiatives to incorporate smart cards into federal documents such as the proof of national identity. For instance, the Government of India has taken numerous initiatives to support in making India a digital economy. It includes e-payment, use of contactless cards, and online banking, and more. Such initiatives are expected to prove lucrative growth opportunities for market players in the near future.
Misuse of lost and stolen contactless cards is expected to hamper growth of the global powered smart card market over the forecast period
When contactless payment function is used, the transaction is processed either online or offline. Online processing of payments requires communication with the customer’s bank, and if a stolen/lost card has been reported, further payments are not processed. However, in case of offline payments that are stored in batches by some retailers and processed after some time or days, unauthorized use of such cards can go undetected. Such critical issues can instill a sense of disbelief or mistrust in potential consumers and retailers, which in turn, hinders the adoption of powered smart cards. Hence, exploitation of stolen or lost cards is expected to restrain the market growth in the near future.
Smart cards have witness relatively higher deployment rates in the U.S. as compared to countries around the world. This is owing to the popularity of contactless payments using smart wearable devices in the U.S. Global interoperability is acting as a driving factor for card issuers migrating to powered smart cards in the country. Furthermore, Canada has witnessed significant growth in contactless transactions in the recent past. Powered smart cards have been adopted by debit and credit card owners and are widely used by consumers to make payments at retail outlets, for transportation, and at movie theaters, etc. However, this trend is expected to shift to contactless payment via smartphones and wearable devices in the future. For instance, in September 2016, Visa Inc. and Ingenico Group partnered to introduce a new and one-of-its-kind contactless payment option. Ingenico Group designed a machine for accepting contactless payments based on IoT, called Connected Screen.
The use of powered smart cards has become common in Mexico in the recent past, even at traditional PoS terminals. Government and regulatory agencies are supporting citizens to make non-cash payments, as customer security as transacting in cash is not a very safe options in Mexico. For instance, since 2012, Citigroup’s Mexican subsidiary, Banamex, has helped facilitate the adoption of contactless payment option in Mexico. Furthermore, Chile is one of the earliest countries in Latin America to deploy contactless smart cards starting with public buses and trains. Moreover, rapid adoption rates and proactive government initiatives have aided adoption of powered smart cards in Chile.
Key players operating in the global powered smart card market are Watchdata Technologies Ltd., Texas Instruments Incorporated, Safran Identity and Security (Morpho SA), Samsung, Oberthur Technologies, Shanghai Huahong Integrated Circuit Co., Ltd., Wuhan Tianyu Information Industry Co., Ltd., Gemalto NV, NXP Semiconductors N.V., Giesecke & Devrient GmbH, Infineon Technologies AG, Eastcompeace Technology Co., Ltd., and Datang Telecom Technology Co., Ltd.