With ecommerce on the rise, the number of transactions being processed online has witnessed staggering growth. Consumers are preferring the use of electronic payment methods over cash transactions due to the easy and quick nature. It also allows consumers to actively track their expenditure and helps leave a digital trace of the transaction for future reference.
The world smart card market valued US$7.89 bn in 2015 and is estimated to reach US$8.58 bn in 2016 with the sale of over 9.7 bn units for the same period. The market is expected to grow at a healthy 8.4% CAGR for the forecast period of 2016 up to 2024 in terms of revenue whereas the volume CAGR is expected to be 9.6% for forecast period.
Increasing Adoption of SIMs Driving Global Smart Cards Market
Technology is moving to newer levels and so is the global smart cards market with the induction of SIMs. Mobile telephony has been using SIM cards since a considerable amount of time and as technology is making the shift from 3G to 4G/LTE, the smart card vendors are also exploring options of using mobile technology for processing payments.
This move is the result of rising security threat to data, customer identity, and numerous breaches on the conventional swipe cards. This has resulted in the rise in demand in global smart cards markets owing to the shift in market trend from conventional chip cards to smart cards. This move allows the market to tap into markets with a booming mobile phone scenario. The MEA and Asia Pacific markets are being actively tapped by the financial services through the SIM route.
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High Migration Cost for Adoption of Smart Cards Restraining Global Market
The shift from swipe cards to smart cards includes a substantial capital investment on the part of the vendors as well as financial institutions. This has resulted in the vendors and financial institutions being reluctant to adopt smart card based system leading to slow growth of the smart cards market. This factor is a major restraint in the global smart cards market. The vendors are willing to make the switch only after being certain if the cards are being issued by the banks. The adoption of newer technologies such as NFC (Near Field Communication) and contactless cards systems is a factor restraining the global smart cards market.
Local Players Increasing Price Pressure in Global Smart Cards Market
For a market dominated by a handful of players, the generation of revenue owing to monopoly was high. But with the relaxed norms, local players are foraying into the global smart cards market intensifying the competition. The result is plunging of smart card prices and changes in marketing strategies to include bundle offers of software solutions along with smart cards to gain an upper hand over the competition.
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Major players in the global smart cards market are Infineon Technologies AG, Watchdata Technologies, Morpho SA, NXP Semiconductors N.V., Insidesecure SA, CPI Card Group Inc., Oberthur Technologies, Giesecke and Devrient GmbH, and Gemalto N.V.