The global smart card market (henceforth, referred to as the ‘market studied’) was valued at USD 7. 82 billion in 2020, and it is expected to reach USD 10. 11 billion by 2026, registering a CAGR of 4. 4%, during the period of 2021-2026 (henceforth, referred to as the ‘forecast period’).
New York, Sept. 06, 2021 (GLOBE NEWSWIRE) -- Reportlinker.com announces the release of the report "Smart Card Market - Growth, Trends, COVID-19 Impact, and Forecasts (2021 - 2026)" - https://www.reportlinker.com/p06134961/?utm_source=GNW
Smart cards provide ways to securely identify and authenticate the holder and third parties who want to gain access to the card. The layout of the chip makes it resistant to tampering, with enough processing power for securing the information it holds, encrypting, and executing any instruction from a program with the predetermined interface. It can save information, such as passwords, account numbers, private keys, or personal information.
In addition to obvious use where an organization may analyze logs of where/when each card has been used at the terminal, such as POS kiosk or door access reader, RFID technology in a newer generation of smart cards allows much more valuable data to be gathered. For example, many smart cards now contain UHF (Ultra High-frequency) antennas, which allow them to be read from a distance of several meters away. This enables organizations to set up a triangulated readers in doorways/larger areas that may track the user movements without requiring a card to be individually presented to the reader terminal.
During the COVID-19 pandemic, the business for smart cards specific to telecommunications and healthcare verticals is less affected than other verticals. The upsurge of healthcare data brings up new challenges in providing efficient patient care and privacy. Smart cards solved both challenges by providing secure storage (dramatically more than approximately 150 bytes that can be stored on a magnetic stripe card) and easy distribution of data. Furthermore, increasing healthcare expenditure is anticipated to propel the growth of smart cards in the healthcare market.
For instance, according to the Centers for Medicare & Medicaid Services, US health spending is projected to reach nearly USD 6 trillion by 2027. Moreover, the emergence of COVID-19 has prompted several nations to develop vaccination proofing plans, which is also anticipated to aid in the growth of the market. Digital credentials are expected to play a major role in the management of the pandemic.
In July 2020, Macao government-issued contactless prepaid payment cards pre-loaded with credit to mitigate the economic impact of the COVID-19 pandemic and provide financial support to its citizens. The cards were produced by G+D Mobile Security.
However, the recent outbreak of COVID-19 has hindered the growth of the economy and its transit to a cash-less economy due to a shortage of swipe machines to process digital payments at retail outlets. For instance, in India, the payment companies get 90% of their point-of-sale terminals from China. However, the imports got suspended, as the Chinese manufacturing activities are getting back to normalcy after recovering from the COVID-19 outbreak. This factor hinders the growth of the contact-based smart card segment.
Key Market Trends
BFSI is Expected to Drive the Market
The adoption of smart cards in BFSI provides various benefits, such as personal data protection and secure data transaction. In the BFSI sector, smart cards are used as credit or debit cards, authentication cards for payments, and access control cards. They can be used as electronic wallets by loading the smart card with funds that can be transferred to a vending machine or an account using cryptographic protocols.
The banking industry had witnessed the benefits of magnetic stripe card technology for a long time and has migrated towards the memory chip or microprocessor on card technology. However, over the last decade, fraud levels have been on the rise, steeply increasing in 2020 from 2019, driven by the increasing need for smart cards for secured payments.
With advances in technology, the number of fraudulent activities started increasing. As a result, the cards and payments industry witnessed a digital transformation by introducing new payment methods, such as EMV chips, PIN cards, and mobile wallets. As the data available in smart cards is difficult to decode, they are witnessing a significant adoption rate in the BFSI sector.
For instance, according to the Consumer Sentinel Network 2020 Data Book by the Federal Trade Commission of America published in February 2021, 2.2 million fraud reports were filed in 2020, amongst which 17% of the reports were related to the payment method with credit and debit cards registering 91,515 and 63,352 reports, respectively.
Over the forecast period, biometric contactless smart cards are expected to gain significant traction in the BFSI sector, with several financial institutes acknowledging the trend. Major global companies, like IDEMIA, are leveraging biometric technology to advance the evolution of smart cards.
The trend of smart cards being produced as a financial product by the addition of various singularities in terms of functionality is becoming increasingly relevant. Consequently, the growth of multi-functional smart cards is anticipated to increase demand, contributing positively to the studied market’s growth.
Asia-Pacific to Witness Highest Growth
China has been one of the pioneers in phasing out checks and introducing the contactless payments, leading to introduction of digital cards. The country has deployed smart cards in various sectors, including transportation sector.
Further, several Chinese banks are developing digital yuan hard wallets, and the People’s Bank of China confirmed that consumers would be able to store digital currency on both physical and digital wallets. The People’s Bank of China (PBOC) has expanded its central bank digital currency (CBDC) pilot to include a contactless ‘hard wallet’ and NFC wearables that enable consumers to make in-store and transit fare payments with their digital yuan.
In June 2021, China Construction Bank announced that they are piloting a biometric ‘hard wallet’ smart card that lets customers store digital yuan and authenticate payments made using the central bank’s digital currency with their fingerprint. The card’s stored value is further secured with advanced fingerprint recognition and authentication.
Japan is also one of the most technologically advanced countries in the world and has deployed smart card in various sectors to benefit from its enhanced security protocols.
The studied market is driven by the deployment of smart cards in the transportation sector across the country. Japan has witnessed the usage of smart cards for transit for a historic time and is expected to see surge in demand in the envisaged period. Prepaid smart cards, like, Suica and Pasmo have witnessed significant usage in the sector and is expected to drive the growth of the studied market in the country.
Furthermore, over the forecast period, the RFID technology is expected to gain significant traction for contactless smart cards in the country. The RFID technology enables the usage of the cards without taking it out of the wallet or bag. For instance, the Felicity Card used for transportation in the region deploys the same technology propagated by Sony Corporation.
The smart card market comprises several global and regional players, competing for market share in a contested market space. Although the market poses high barriers to entry for new players, several new entrants have been able to gain traction. This market is characterized by moderate/high product differentiation, increasing levels of product penetration, and high levels of competition. Generally, the solutions are offered as a package, making the consolidated offering look like a part of the entire suite. For instance, smart cards are sold with POS terminals.
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