The smart-card market in Asia experienced a watershed year in 2001, as the cost of systems fell, card issuers began to offer multiple applications and governments put their weight behind the technology, according to Shuan Ghaidan, vice-president of advanced payment systems at MasterCard International Inc.
“We’re crossing a line of no return where consumer demand is driving the market,” he said in a keynote address here at the Cards Asia conference. “We have now issued over 7 million smart cards in Asia, of which 4 million are of the more advanced multifunction type.”
Asian countries have become enthusiastic supporters of smart-card projects in both the private and public sectors. As well as the obvious high-technology markets such as Japan, Korea and Singapore, significant smart-card projects have been launched in Malaysia, Taiwan, the Philippines, Hong Kong and Macau, Ghaidan said.
Importantly, many of these projects use multi-application smart cards, where the financial returns are greatest. According to MasterCard research, smart cards only generate more revenue than they cost when there are at least three applications on the card. Each additional application improves the card revenue, a fact which industry cannot afford to ignore, according to Ghaidan.
“Previously, industry was somewhat fixated on cards with a single application such as electronic cash,” he said. “But the industry has now started to move towards multi-application cards which make a much better business case.”
Ghaidan noted that smart cards have been slow to take off even in the financial industry where they would seem to be ideally suited. Now that the price of multi-application cards has dropped below US$3 per card, issuers need to concentrate on consumer issues rather than technology and cost issues, he said.
“The consumer proposition is key – we must deliver a quality offering so that customers get interested,” he said. “Don’t think that consumers cannot understand the technology – they can – but they are more interested in the proposition, such as the convenience offered by a multi-application card.”
Smart cards have been used in several different sectors – retail, financial services, government, telecommunication and IT. Typical applications have been in digital identity, stored value cards, loyalty programs and access control. Good opportunities are now emerging for card issuers as deregulation, technology convergence and globalization of business all increase.
“Smart cards can strengthen relationships with consumers, offer new revenue streams and new delivery channels,” Ghaidan said. “They will also be a delivery mechanism to help us offer e-business applications more securely.”