Smart Cards Market Driven by Need for Secure and Reliable Instant Transactions

Smart cards are chip-cards that integrate an embedded chip to store information in the digital form. The embedded chip can be a microprocessor or microcontroller or a memory chip. Smart cards offer functionalities such as convenience, speed, ease of use, and security. Smart cards are classified into hybrid smart cards, contactless smart cards, contact-based smart cards, and dual interface smart cards. Contact-based smart cards are used as sim cards and dual interface smart cards are primarily used in government and banking applications due to their reliability. Hybrid cards, which have more than one smart card inside, with no interface between each other, are multifunction cards used for several applications.

Increasing security threats and the growth in fraudulent activities are propelling the adoption of smart cards across the globe. The global smart cards market is expected to expand at a CAGR of 7.4% from 2016 to 2023, rising from US$7.25 bn in 2014 to US$14.17 bn by 2023, states a research report by Transparency Market Research (TMR).

In this blog post, TMR answers three critical questions about the global smart cards market:

Q1. What are the factors driving the smart cards market?

The decreasing cost of sim cards is one of the prime factors boosting the global smart cards market.

With the increased penetration of smartphones, the market for smart cards is expected to grow steadily. The rising trend of online transactions and payments, and thus an increase in security risks has driven up the demand for secure and reliable payment transactions. This in turn is encouraging innovations in smart card technology, thereby boosting the market. Europay, MasterCard, and Visa (EMV) chip technologies have become global standards for debit and credit card payments, by fighting fraudulent activities and guarding payment data stored in the cards. Thus, the increased adoption of EMV cards makes a significant contribution in boosting the smart cards market worldwide.

Q2. Which companies are dominant in the smart cards market?

The global market for smartcards was dominated in 2014 by Giesecke & Devrient (G&D) GmbH, Gemalto NV, and Oberthur Technologies. These three companies collectively accounted for 50% of the global smart cards market revenue. Some of the other companies operating in the smart cards market include Eastcompeace Technology Co., Ltd., Morpho S.A., Watchdata, Wuhan Tianyu Information Industry Co., Ltd., and Datang Telecom Technology & Industry Group.

Q3. What are the recent innovations in the global smart cards market?

NagraID (Switzerland) has announced the launch of bank cards with additional protection levels. NagraID DCVx is a card with a display on the back showing the CVV code, required for internet payments, but with a unique feature of updating itself periodically. In other words, the CVV code is periodically changed on the integrated display, with the code being set by the bank. The DCVx display is based on the electronic inks technology, which has extremely low power consumption, and thus, the built-in battery lasts for 3-5 years.

Zwipe (Norway) has recently developed smart cards with a biometric sensor. A cardholder has to press the window on the sensor using his thumb for a transaction, rather than entering a PIN on the terminal. The verification is carried out within the chip itself, where the fingerprint is stored. The Zwipe fingerprint sensor does not need any battery, and is powered by the NFC antenna of the card.

Such innovations in the field are expected to influence the smart cards market positively by increasing their adoption.