Smart cards are flourishing within the payment cards market and are set to make a major impact in the market over the next five years with the increasing adoption of EMV within the industry. Penetration of smart and EMV payment cards is increase year on year and this trend is set to continue for the foreseeable future.
So why are so many countries and regions moving their payment card credentials to incorporate a smart card or wish to join and adhere to the EMV standard? There is not one defiant answer with a number of factoring drivers for migration:
• Creating a widespread system to allow customers have access to banking facilities anywhere in the world
• Increased security with greater data protection and encryption on the card itself
• Mag-stripe technology outdated and easier to capture/manipulate for fraudulent use
• An increasing traveling population having problems using their non EMV cards in EMV compliant countries creating inconvenience to banking customers
• External pressures from neighboring countries adopting EMV results in the transference of liability for non EMV fraudulent payments and a shift of fraud from EMV compliant countries to non-EMV.
• Added value products – multiple applications on one card
• Contactless adoption
• Another step in creating a smart city creating multiple capabilities on one card with integration with travel and other services
At a top-level, the argument for migration is overwhelming; although the level of investment required is also a mitigating factor. Upgrading cards and infrastructure require extremely high levels of capital, but considered by most to out outweigh those losses accrued by fraudulent activity.
Although smart and EMV payment cards are well positioned there still remains a higher volume of mag-stripe credentials worldwide. This is set to change over the next five years as smart and EMV payment cards claim further share over the payment card market. China is one country which will have a significant impact with an estimated 2.3 billion payment cards in circulation, aiming to complete migration to a chip card by 2015. Further analysis and ABI’s views on the payment card market can be found in ABI Research’s recently published insight – World Smart and EMV Payment Card Market 2010 – 2016, providing commentary and findings from our 2011 Payment Card report.