Smart Card Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

Smart Card Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The Smart Card Market is anticipated to grow at a CAGR of 5.4% over the forecast period. The rising digitalization, increasing demand from online shopping, demand for healthcare, and access control applications are the primary factors augmenting the growth of the smart card market.

Key Highlights

• Smart cards provide methods to securely identify and authenticate the cardholder and third parties who want access to the card. For instance, a cardholder can use a PIN code or biometric data for authentication. Smart cards also provide a way to securely store data on the card and protect communications with encryption.
• The demand for smart cards has been growing each year with applications in various end-use industry markets due to the recent introduction of other security and privacy issues for advanced smart card security applications. Globally, the banking and finance industry is expected to account for a significant share of the smart card market. With critical financial operations being the industry's core, security remains the primary focus. This supports the adoption of advanced authentication solutions and promotes the acceptance of the smart card within the sector.
• The initial cost required for the smart card used for access control and other applications is high as it uses readers and chips of high quality for its functioning. The deployment of readers and chips requires additional costs, which increases the overall cost of smart cards, restraining the growth of smart cards.
• During the COVID-19 pandemic, the business for smart cards specific to telecommunications and healthcare was less affected than other verticals. The upsurge of healthcare data brings up new challenges in providing efficient patient care and privacy. Smart cards solved both challenges by providing secure storage (dramatically more than 150 bytes that can be stored on a magnetic stripe card) and easy data distribution. Increasing healthcare expenditure is anticipated to propel the use of smart cards in the healthcare market. ​
• For instance, according to the Centers for Medicare & Medicaid Services, US health spending is projected to reach nearly USD 6 trillion by 2027. Moreover, the emergence of COVID-19 has prompted several nations to develop vaccination-proofing plans, which are also anticipated to aid market growth. Digital credentials are expected to play a major role in managing the pandemic.

Key Market TrendsBFSI is Expected to Drive Market

• The adoption of smart cards in BFSI offers various benefits, such as personal data protection and secure data transactions. Additionally, in the BFSI sector, smart cards are utilized as credit or debit cards, access control cards, and authentication cards for payment.
• They can be used as electronic wallets by loading the smart card with funds that can be transferred to a vending machine or an account using cryptographic protocols.​
• The banking industry has witnessed the benefits of magnetic stripe card technology for a long time and has shifted towards the memory chip or microprocessor on card technology. However, over the last decade, fraud levels have increased from 2021 to 2020 and are driven by the increasing need for smart cards for secured payments.​
• The banking industry has witnessed the benefits of magnetic stripe card technology for a prolonged period and has migrated towards the memory chip or microprocessor on card technology. However, over the last decade, fraud levels have been on the rise steeply increased in 2021 from 2020 and are driven by the increasing need for smart cards for secured payments.​
• Across geographies, the growth of neobanks and the digital financial technology sector has directly impacted the studied market. Especially developing countries like India are adopting cashless payment methods. They have received support from government bodies encouraging the usage of cards and other cashless payment modes, creating an ancillary demand for smart cards.
• Financial institutes have leveraged smart card technology and engaged in various partnership arrangements, which has further supported the market's growth. For instance, ICICI Bank announced that it has entered into a partnership with Greater Chennai Corporation and Chennai Smart City Limited in February 2021 to introduce the Namma Chennai Smart Card dedicated to providing citizens of Chenna, India, with a unified solution for various payments.

Asia Pacific to Witness Highest Growth

• The Asia Pacific region is expected to dominate the smart card market as the region has a higher adoption rate of smart cards resulting in demand from BFSI, healthcare, retail, and government.
• China is projected to register significant demand in the region for smart cards owing to a large presence of consumers and the presence of key manufacturers of smart cards. Various banking institutes have introduced smart cards, positively influencing the market's growth. For instance, in June 2021, China Construction Bank announced they pilot a biometric 'hard wallet' smart card that lets customers store digital yuan and authenticate payments made using the central bank's digital currency with their fingerprint. The card's stored value is further secured with advanced fingerprint recognition and authentication.
• Several banks operational in the region have collaborated with smart card developers to introduce various kinds of smart cards in the country. Few banks that introduced smart cards in late 2020 or early 2021 include Axis Bank, ICICI Bank, and SBM Bank, among others in India.
• Furthermore, in July 2021, MoriX Co., a Tokyo-based electronics company, partnered with Fingerprint Cards AB to develop and introduce biometric payment cards leveraging the Fingerprints' T-Shape module and is expected to be integrated with payment cards using standard automated manufacturing processes.
• New development and initiative of smart card adoption in other end users cater to market growth. In April 2021, Octopus, one of the smart card operators in Hong Kong, introduced transit cards for public transportation users in more than 300 Chinese cities. Under the company's offshore expansion plan, Octopus transit card users will be able to cover the payments for public transportation on buses, rails, and ferries in mainland China by the end of 2021 or early 2022. The Octopus card will initially have a maximum top-up value of HKD 3,000 (USD 386) and can be upgraded to the digital Octopus cards in a phase two launch.

Competitive Landscape

The Smart Card Market is fragmented because of the presence of several global companies. Some of the key players are HID Global Corporation, CardLogix Corporation, Thales Group, etc. Key players in this market are introducing new innovative products and forming partnerships and collaborations to gain competitive advantages.

• July 2021 - Infineon and IDEX Biometrics announced a platform for biometric smart cards with superior performance and scalable, cost-effective manufacturability. This new design significantly improves the card system level, allowing easy integration into existing hot lamination card manufacturing processes. The architecture enhances card performance while reducing manufacturing sophistication at the same time.
• July 2021 - Gemalto NV announced a new card incorporating a biometric sensor, providing users with increased security. The contactless biometric card simplifies proximity payments and provides an essential level of privacy. Prominent EMV payment schemes, like MasterCard and Visa, fully certified the cards.

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