The main smart card vendors in Western Europe expect their revenues to grow by over 56% this year, according to a new survey by International Data Corp (IDC). Europe is still the world’s largest smart card market, due to early adoption of the technology for use in banking, security and mobile phones. However, by 2002 Europe will see its share of the global market fall from 80% in 1997 to 55% as new applications are rolled out in Asia and North America, IDC forecasts. Microprocessor-based cards are the fastest-growing segment of the smart card industry, IDC claims. Last year, 197 million microprocessor cards were shipped worldwide, a figure which is expected to reach 308 million in 1998. IDC predicts that the UK and German microprocessor card markets will grow by 53.2% and 54% a year respectively up to 2001. France, which has led the rest of Europe in smart card applications and is therefore a more mature market, will see slower growth of 37% during the same period. IDC says that Java smart cards will represent just 3% of the European microprocessor market this year, rising to 40% by 2001. The main drivers for Java cards will be applications requiring a secure transaction and payment medium such as computer access control, workgroup computing and e-commerce, while the biggest inhibitor will be the availability at reasonable prices of chips with sufficient memory and processing power. Contactless smart cards, which transfer data using radio waves, are still in their infancy, IDC says. Because they eliminate the need for metal-on-metal contact, contactless cards overcome the limitations of contact-based smart cards which are prone to metal corrosion and repair problems. However, the contactless card market will remain limited in size up to 2001, IDC says, due to the massive installed base of magnetic stripe cards and the need to fund a shift to new infrastructure in existing markets. Mobile telecoms and banking will remain the leading smart card applications over the next five years, IDC predicts. Debit/credit and stored value payment cards will grow from 48% of the European smart card market in 1996 to 55% by 2001, while GSM mobile phone cards will fall from 34% to 20%. By 2001, new applications will become significant such as health care and personal files (9%), identification and security (9%), and transport (4%). The most important development in the smart card market will be the availability of multi-function cards which combine GSM services, identification, electronic cash, credit/debit and loyalty schemes. IDC predicts that co-branded multi-function cards will be launched by a number of European telecoms operators within the next 12 months. Java will be a key enabler in moving the smart card industry away from proprietary technologies to the open platforms needed for multi-application cards.
