SINGAPORE--The island-state has the highest per capita usage of chip cards in the Asia-Pacific region, followed by Taiwan, Malaysia and South Korea, according to a Visa survey.
Conducted in November last year, the study involved 1,800 respondents in Australia, Hong Kong, Indonesia, Japan, South Korea, Malaysia, Singapore, Taiwan and Thailand. Each participant has at least one payment card, and owns either a cellphone or computer. Findings from the survey were released last week.
The research was carried out to identify consumer interest in the smart card space as well as attitudes toward contactless, or radio frequency-based, smart cards, said Peter Manners, head of chip, emerging products and technologies, Visa Asia-Pacific.
In Singapore, 98 per cent of respondents had used a smart card at least once, due to the high usage of contactless payment cards on the nation's public transport system.
Taiwan came in second, where 52 percent of respondents had used smart cards at least once, Manners said. There are currently 140 million smart cards worldwide, of which 34 million are circulated in Asia, he revealed.
The cost of smart cards has also declined by 40 to 60 percent in the last two to three years, he said, noting that it now only costs US$0.89 to produce a smart card. This price, he added, is "not very much more expensive than magnetic stripe ones".
However, he does not expect the magnetic stripe to be replaced completely with smart cards in the near future because the market for magnetic stripes still remains. "For example, in Asia there is little demand to replace magnetic stripe readers at ATMs with smart chip readers because of low fraud," he said. Manners however, said that the region is moving toward a hybrid environment where magnetic-strip and chip-based cards will co-exist.
"There is growing interest in using smart cards as consumers become more familiar with what they can do," he said. "Security and convenience came through very strongly (in the survey) as the attractions of smart card technology."
About 63 percent of all respondents believed smart cards were more secure--with data encryption--than their magnetic-stripe counterparts. "It is more difficult to get the data out of smart cards, and this is effective in combating credit card fraud," Manners said.
In Singapore, however, only 41 percent of respondents thought smart cards were more secure than magnetic stripes. "The card issuers in Singapore have done a great job at managing fraud, so credit card fraud is not as big an issue compared to countries like Taiwan," he explained.
With the ability to store 150 times more data than magnetic stripes, smart cards can also serve as loyalty and discount cards, he added. Merchants specializing in fashion and design, for example, can store and retrieve a customer's personal information such as shirt sizes, Manners said.
He also noted that Asia is the next region after Europe, to move from magnetic-stripe cards to smart cards. There was a more urgent need to migrate in Europe because of rising levels of credit card fraud, he explained.
"In Asia, the card payment community has done a better job at combating fraud, so there hasn't been a strong business case to migrate to chip," he said.