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Contactless smart cards, already having found user appeal for their freedom of form, are expected to see wider adoption in Asia-Pacific once key implementation projects are fully operational in two years.
Frost & Sullivan research analyst Reuben Foong expects growth in unit shipments to peak from 2012 to 2016 at rates between 20 and 25 percent year-on-year, and averaging at a CAGR (compound annual growth rate) of 16.4 percent (2009-2016). By end-2016, an estimated 1.9 billion contactless smart cards will be shipped in Asia-Pac, up from 590 million last year.
New analysis from Frost & Sullivan (smartcards.frost.com), Asia-Pacific Smart Card Integrated Circuit on Different Form Factors, forecasts the region's contactless smart cards sector to gross estimated revenues of just over US$2.0 billion by the close of 2016, at a CAGR of 13 percent (2009-2016).
The contactless cards market was worth US$775 million in 2009, against a total smart cards market (contact and contactless) of US$1.94 billion. By units shipped, contactless cards accounted for 23 percent of the 2009 total card shipment. Foong expects this to grow to half of all smart cards shipped in 2016.
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According to Foong, demand for contactless cards will be driven mainly by NFC (Near Field Communication), e-Passport and mass transit projects being implemented around the globe and across Asia-Pacific.
"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," he says. "In Asia-Pacific, we can expect large-scale mobile NFC deployments in the next one to two years."
He adds that NFC on mobile devices will also prompt renewed interest in contactless bank credit and debit cards, with security issues having been ironed out.
The use of the contactless interface in e-Passports has long been a well-accepted standard worldwide sanctioned by the International Civil Aviation Organization (ICAO), United States and European Union, and more than 80 countries having already adopted that standard.
Foong expects demand for contactless cards for e-Passport and similar government identification (ID) applications in Asia to continue. "Government ID projects are by far the largest user of contactless cards currently (66 percent of contactless card shipment, 2009), and will likely remain so for the next five years as more nations migrate to the contactless interface," he explains. "Bearing in mind also that e-Passports have to be renewed, typically, every five to ten years."
India, China, the Philippines, Indonesia and Vietnam are all slated to implement e-Passports within the next five years.
One of the earliest applications of smart card technology was transportation such as mass transit services, which has, arguably, been the platform on which new form factors were introduced and espoused, motivated by user convenience. Mass transit ticketing is the second biggest application for contactless cards - 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 other than standard plastic cards include minicards and USB devices - both also available in contact form - tokens and wristbands and watches.
While some of these forms have been around for some time, they have yet to find commonplace purpose, Foong says. "As with any new technology, it will take time to find a proper niche as well as a concerted effort amongst all stakeholders to bring about a competitive value proposition to end users and gain market acceptance," he concludes.
The Asia-Pacific Smart Card Integrated Circuit on Different Form Factors study is part of the Smart Cards Growth Partnership Service program, which also includes research in the following markets: South Korea smart cards market, NFC environment scan, Asia-Pacific smart cards market outlook, global government ID, global corporate security and best practices for contactless convergence. All research services included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants.
Frost & Sullivan (frost.com), the Growth Partnership Company, enables clients to accelerate growth and achieve best-in-class positions in growth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined research and best-practice models to drive the generation, evaluation, and implementation of powerful growth strategies. Frost & Sullivan leverages over 45 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from 40 offices on six continents.
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sarah.lourdes[.]frost.com 
