Contactless smart card market on upward spiral

MUMBAI: The contactless smart card market is witnessing remarkable growth due to significant advancements in the e-passport and micro-payment segments.

While the U.S. Visa Waiver Program deadline forces participating countries to hasten their e-passport rollouts, the future of the micro-payment segment also looks promising, with its successful introduction in North America, Europe and parts of Asia.

New analysis from Frost & Sullivan, World Contactless Smart Cards Market, reveals that the market earned revenues of $408.9 million in 2005, and estimates this to reach $1, 636.2 million in 2011.

"The e-passport segment made big strides as interoperability efforts intensified, impelled by a heightened sense of urgency for more secure and sophisticated travel documents," say Frost and Sullivan Industry Analyst Michelle Foong. "The payment market also saw increased uptake as users across more developed markets warmed up to the idea of contactless payments."

However, the increasing use of contactless smart cards in payment, transit and ID raises questions from privacy and human rights advocate groups owing to the lack of and understanding about the technology and the confusion between radio frequency identification (RFID) tags and contactless smart card.

While RFID tags are designed to be cheaper and less secure for applications used in supply chain management and the tracking of non-human goods, contactless smart cards are made to be more secure and reliable so that even highly confidential and private information can be transacted and stored.

"This confusion highlights the urgent need for market participants and end users to crystallize their understanding of the two different technologies at work here," notes Michelle. "This understanding is critical for tapping the full potential of the contactless smart cards market."

Therefore, vendors and government agencies should initiate greater efforts to promote awareness and demonstrate that contactless smart cards can be implemented in a highly secure method and can be relied on for secure transactions in payment, health and identification. Besides alleviating user anxiety, market participants should also address transitory rollout issues.

"However, the market is really poised for growth given that these cards are really proving their worth, in the convenience of contactless micro-payments, rapid success in mass transit applications, and the rise of mobile payments," concludes Michelle.