The market for smart cards in North America is expected to grow by 35 per cent each year until 2012, but users are reluctant to use the technology for a variety of reasons, including cost of installation and a misunderstanding of the technology’s security advantages, according to an industry analyst.

Frost & Sullivan, an Austin, Tex.-based market research firm, recently published its predictions for the smart card market in a report, titled World Corporate Security (Physical and Logical Access), which forecasts the total market will reach US$235 million in 2012.

The report includes information on the use of smart cards for physical access (such as opening doors) and for logical access, to networks and systems.

Frost & Sullivan predicts over the next four to five years, companies that focus on security are “likely” to install access control systems using smart cards.

Michelle Foong, Frost & Sullivan’s industry analyst for smart cards, told ComputerWorld Canada the security smart card market in North America was more than US$4.5 million in 2006 and is likely to grow by more than 25 per cent each year between now and 2012. More than 50 per cent of the revenues in 2006 were from logical and “dual” access control, which are platforms that provide both physical and logical access.

Foong, who is based in Malaysia, sent her answers by e-mail.

She said there is “still some element of user anxiety” over smart cards because most cards used to control physical access are contactless – meaning they transfer information wirelessly to the readers. This raises a concern that thieves could get information by stealing the cards or by skimming information from an unauthorized reader.

But Foong said this perception is “largely” due to a misunderstanding of the cards’ security features. Although some organizations abandoned their smart card implementations in the late 1990s, Foong described these as “isolated cases. “Realistically, we expect these projects to experience more stumbling blocks and cause more ripples throughout deployment due to possible national, political and administrative issues,” Foong wrote.

She added users who have converted their payment systems to accept smart cards instead of magnetic stripe credit cards have reduced their risk of fraud because smart cards are more difficult to forge.

“This should encourage the adoption of the same technology in logical access control, since these cards can be equipped to be more secure, reliable and scalable than many other options,” Foong wrote.

She added the smart card hardware itself is not the only security consideration. “The possibility of fraud and security breaches are also dependant on the processes, backend systems, networks and databases linked to the smart card platform.”

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