Demand for contactless smart cards in APAC to surge from 2012

Implementation of e-passport and mass rapid transit projects will spur demand for contactless smart cards, driving market up 25 percent to US$2 billion by 2016, finds new report.

Contactless smartcards are expected to be in greater demand in the Asia-Pacific region from 2012, following the completion of key government-led projects including near-field communication (NFC), e-passports and mass transit, according to a Frost & Sullivan report released Thursday.

Contactless smartcards unit shipment is expected to grow at a compound annual growth rate (CAGR) of 16.4 percent from 590 million in 2009 to 1.9 billion units by 2016. Worth US$775 million last year, this market is expected to generate revenues at just over US$2 billion by the end of 2016 at a CAGR of 13 percent.

The overall smartcards market, including contact and contactless cards, was worth US$1.9 billion in 2009, Frost & Sullivan said. Contactless cards accounted for 23 percent of the overall shipment in 2009, with this figure expected to reach 50 percent in 2016.

"The world is already prepared to roll out NFC commercial projects with a small number of commercial projects having already begun and more than 200 pilot projects already completed across the globe," Reuben Fong, research director at Frost & Sullivan. "In Asia-Pacific, we can expect large-scale mobile NFC deployments in the next one to two years."

Fong added that NFC on mobile devices will also prompt renewed interest in contactless bank credit and debit cards with security issues having been ironed out.

With the United States, European Union and over 80 countries adopting the e-passport system, the analyst expects demand for contactless cards and similar government identification (ID) applications in Asia to continue.

India, China, the Philippines, Indonesia and Vietnam are all slated to implement e-passports within the next five years, according to Frost & Sullivan. The demand will continue to surge as such passports are renewed every five to 10 years, the research firm added.

One of the earliest applications of smartcard technology was transportation such as mass transit, which has been the platform on which new form factors were introduced and brought about greater user convenience.

In fact, mass transit ticketing is the second biggest application for contactless cards--accounting for 28 percent of contactless card shipment in 2009--after government ID, and Foong believes uptake will continue with the rise of mass transit projects across Asia-Pacific.

Other forms of contactless card applications part from the standard plastic cards include minicards and USB devices--both of which are also available in contact form--tokens, wristbands and watches.

While some of these forms have been around for some time, they have yet to find commonplace purpose, Foong said. "As with any new technology, it will take time to find a proper niche as well as a concerted effort among all stakeholders to bring about a competitive value proposition to end-users and gain market acceptance," he added.

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