An estimated one billion payment cards with contactless capabilities will be shipped globally in 2016, up from just 170 million in 2010. This includes EMV dual interface cards and the non-EMV pure contactless push in the US.
Smart card shipments, which include not only contactless payment cards, but also EMV and non-EMV payment cards, will reach one billion during 2011. ABI Research forecasts that smart card shipments will overtake mag-stripe card shipments by 2015.
“There is quite a buzz around contactless payment capabilities,” says Phil Sealy, research analyst, autoID and smart cards. “There is a higher level of convenience for cardholders, with quicker transaction speeds and a reduction in time spent queuing. Giving banks the ability to add another payment application to their portfolios, the emergence of contactless technology is augmenting the overall trend from cash-based to cashless societies.”
Smart cards are also being touted over mag-stripe cards, especially in developing countries. “The entire banking population worldwide is increasing,” Sealy says. “As countries become developed, the demand for banking services increases. For the banks, the primary reason for EMV migration is that EMV provides a higher level of security over mag-stripe cards. “As such, card-based fraud is more prevalent in countries with the weakest security protocols.”
China in particular is a big country of interest in the smart card market. China alone has 2.3 billion payment cards currently in circulation, all of which will need to be replaced by smart cards in China’s effort to undergo a complete transition to smart cards by 2015.
Although smart card growth is expected to accelerate rapidly, mag-stripe cards are not disappearing any time soon.
“Mag-stripe cards still have a strong hold in the payment card market, and will still account for 50 percent of all cards in circulation in 2016,” says Sealy.
ABI Research’s new report, “Payment Cards,” (http://www.abiresearch.com/research/1005789) studies the technical drivers and inhibitors affecting the payment card market. Examining smart-cards, EMV migration, and traditional mag-stripe technology, this study provides ABI Research’s view of the most likely future market changes and developments in the payment cards industry.