Crossing Market Vertices: The Future for Physical and Digital Smart Cards

The year 2018 may be the beginning of an exciting new era for smart cards and mobile wallets, as various companies are looking to expand their products from their original service (e.g., payment, transport, access, and ID) outward. Mobile wallet company GrabPay (Singapore) is considering expansion of its payment services from taxi and in-store purchases to include public transport. Apple, Samsung, and Google Pay have all begun expanding their respective mobile payment solutions to support closed-loop transit applications, expanding beyond the open loop capabilities. Most notably, Apple Pay has announced support for the FeliCa protocol, and Google has entered the closed-loop ticketing market via the integration of MIFARE 2GO. WeChat (China) is expanding into healthcare, allowing users to leverage the app to access medical services without the need of an extra smart card.

The drive toward increased connectivity via the Internet of Things (IoT) and smart city environments will provide opportunity for growth in all aspects of the smart card market. Market convergence is also a natural progression of any smart service, enabling vendors such as Google, Apple, Samsung, and WeChat, among many others, to balance out the challenges of adoption (including market coverage, trust building with relevant authorities and trust of the users) by enticing users with ease of use and a one-stop smart service.

At this moment in time there are already projects providing this multiapplication service; most notably, university student cards, where a registered student can use their card for secure physical access to libraries and/or accommodation, for complete payment for library services, and, in some instances, for payment for transport tickets on shuttle bus services. For example, one of the top universities in Buenos Aires has deployed a biometric multiapplication smart card. As for mobile wallets, the rise of open-loop acceptance has paved the way for them to access a new end market in transportation. Apple took the steps of opening up its Near-Field Communications (NFC) controller via its iOS 11 update. And iOS 12 will take this even further, with Apple expanding its mobile wallet features to include student ID in access, payment, and ID capabilities. This will provide a platform from which Apple Pay could further expand its wallet capabilities. If this rumor turns out to be true, Apple will be able to expand into a broad range of applications, including smart locks, automotive, access control, ticketing, hospitality, and hotels, to name but a few. GrabPay is currently in the process of doing just this—it is applying its app into smart transport, not solely as a virtual EMV card but as a digitized ticketing card. WeChat is now functional in Shanghai’s transport system with their Quick Response (QR) code–based payment capabilities. As one of the largest payment apps in China, WeChat has a high chance of successfully breaking into this market.

But there is a question to be asked: What is the best platform from which to provide multiapplication service?

Access

When looking for previous examples, Access holds some precedence in the multiapplication ability. Universities such as the University of Manchester and the University of Edinburgh in the United Kingdom both use smart cards to authenticate student IDs by combining the ID with physical access control functionality. The latter also combines pay services for use within campus shops and food services. Access is a strong candidate to launch small- to medium-scale multiapplication projects, as it ties both ID and management of individual cards and devices. It can track individual devices if necessary and uses a wide range of technologies, depending on the system adopter (from Radio-Frequency Identification [RFID] tags to smart cards, Blue Tooth Low Energy [BLE], biometrics, and NFC).

ID

Identification cards are a challenge, as most are owned by government agencies that need to rely on the integrity of the secure element and the information to be a valid and permissible device. That said, it would be the most secure of the three services from which to build multiapplication capabilities. The most functional steps that would entice users to adopt ID in their day-to-day lives for more than just authentication would be either payment or transport. In regions where a national ID is prevalent or where it is mandatory, it would be beneficial for local and national governing bodies to provide a service from which they can leverage information such as public traffic and spending habits. It could even be possible to tie in the payment of taxes and bills, which is currently being trialed in Chennai, India.

Payment

As described in the previous section, payment not only has precedence in transport both digitally and physically but also is a daily necessity that is increasingly being leveraged by the public worldwide. The growth in use demonstrates trust in this device type. As companies who are in this field are looking to expand into transit, it is highly possibly that payment will be the more widely used platform to leverage for multiapplication services, creating a one-stop device for smart services. Payment is most likely the leading platform from which other services can be rendered, with mobile wallet apps paving the way. The nature of mobile wallets allows a system to digitize its information/key and to store it virtually on the device in a secure manner. From there it can interact with a reader in a series of ways, by barcode/QR code, NFC, and pictorial or even audio authentication. With this wide range of authentication methods, mobile wallets can scale to be involved in nearly any market technology level and in most markets. As such payment is a strong contender to become the anchorage for a multiapplication service, especially as a mobile app.