The global market for smart cards will see steady growth due to the increasing emphasis on the Europay, MasterCard and Visa (EMV) standard in the payment and banking vertical. In 2015, multiple financial institutions in the US are expected to make their payment cards EMV-complaint. Countries in the Middle East, Africa and Asia-Pacific will follow suit.
New analysis from Frost & Sullivan, 2014 Global Smart Card Forecaster, finds that the market earned revenues of €5.37 billion in 2013 and estimates this to reach €7.16 billion in 2019. The SIM card segment will account for 42.6% of the total revenue while the banking and payment vertical will make up 33.5%. The smart card government ID and transportation sectors will constitute the rest.
EMV in the US will drive smart card growth
“In addition to the shift to EMV, financial institutions across the globe will migrate to contactless cards, opening up new opportunities for the smart card industry,” comments Frost & Sullivan Information & Communication Technologies Global Program Director Jean-Noël Georges. “China and Europe, in particular, will lead the way in terms of employment of contactless technologies.”
However, this rapid shift to EMV contactless solutions and the associated large volume of shipments will cause pricing pressures in the smart card market, mainly in Asia-Pacific. A similar case is also expected in the US, where the uptake of EMV and contactless solutions has been considerably delayed. With many companies in the US having already invested in EMV in anticipation of a possible migration, it is uncertain whether these firms will have a positive return on investment.
Overall, it is imperative for smart card vendors to switch their core business from physical smart cards to software and services, since the physical smart card market will offer limited growth potential in the long term. This is particularly true since the announcement of a software alternative named Host Card Emulation (HCE) that could threat the well established hardware embedded security for mobile.
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