Smart Card Market Size, Share & Trends Analysis Report By Type (Contact, Contactless, Dual Interface), By Component (Software, Hardware, Others), By Access Type (Physical, Logical), By End-Use (Government, Retail, Healthcare, Financial Service, Transportation Service, Others) and By Region(North America, Europe, APAC, Middle East and Africa, LATAM) Forecasts, 2022-2030

Market Overview

The Global smart card market size was valued at USD 10230 million in 2021 and is expected to expand at a CAGR of 6.4% from 2022 to 2030 and reach around USD 17925 million.

A smart card is a plastic card with a microprocessor chip embedded in it for data storage, management, and authentication. Data is transferred from a card to a reader, part of a computer system. Smart cards improve transaction security by storing user and account identities in a tamper-proof manner. Contact smart cards, contactless smart cards, and dual-interface smart cards are the three types of smart cards. The smart card market is growing due to the increased use of IoT (Internet of Things) technology and mobile phones in SIM cards.

Furthermore, the pressing need to ensure transaction security and convenience is a significant driver of smart card demand. The increasing use of smart cards in various industrial sectors, such as healthcare, banking, information technology, retail, and transportation, is expected to drive market growth over the forecast period. The growing demand for smart cards from government sectors is another critical factor driving the market growth. The Indian government, for example, has launched several programs, including the Rashtriya Swasthya Bima Yojana (RSBY), the National Rural Employment Guarantee Act (NREGA), and the Public Distribution System (PDS), all of which are driving up demand for smart card technology in India.

Market Dynamics

Market Drivers

Pandemic Had Surged the Demand for Contactless (Tap-and-Pay) Payments

Before the pandemic, consumer awareness of the benefits of tap-and-pay cards was low. However, with the outbreak and spread of the COVID-19, the use of contactless payments has exploded. People used contactless payment options to buy groceries, household items, and other items during the pandemic, which forced limited contact and social distance. Consumers strive to keep their exposure to a minimum during transactions. People started considering contactless (tap-and-pay) cards to be the fastest and safest way to pay. consumers believed that tap-and-pay payment methods and cards are the safest way to prevent the spread of the virus. Cash and checks were deemed the least safe in preventing the spread of the virus. The general perception of tap-and-pay cards as the most secure, preferred, convenient, and the fastest payment method has driven the market.

Rapid Adoption of Smart Cards in the Healthcare Market

Smart cards in healthcare provide greater privacy and security when managing personal data such as health records and identities. Furthermore, this smart card verifies a patient's identity during medical treatment and aids in health-system management. The growing use of smart cards in data management for patients and patient management is expected to boost the market for smart cards in healthcare. Furthermore, increasing the use of these smart cards reduces the risk of medical errors and lowers healthcare costs, which are expected to increase smart card adoption in the healthcare sector. Furthermore, these smart cards have an embedded electronic chip with an integrated circuit, which reduces the risk of medical identity theft and fraud. The smart card market in healthcare will experience a surge in demand due to these factors. The market is expected to expand further as demand for better patient care with a low risk of fraud grows. In recent years, there has been a significant increase in the number of cases of medical benefit fraud and other types of healthcare fraud. Several national governments are evaluating the use of smart cards to obtain citizens' medical records. Healthcare insurance companies commonly use smart health cards to improve claim regulation and other medical practices.

Market Restraints 

Security and Data Theft Concerns are the Obstacles

With the higher benefits, smart cards have piqued consumer interest in recent years. However, one of the factors limiting the smart card market's growth is its high cost. Smart cards for access control and other applications require significant upfront capital investments. To provide physical or logical access, smart cards need readers to read encryptions and obtain information. There are additional purchase costs associated with distributing these drives. Smart card readers cost, on average, between $50 and $300. Smart cards cost anywhere between 2 and 10 dollars. The use of high-capacity chips with advanced capabilities raises the price of these cards. As a result, it is expected that equipping employees with multifunctional smart cards will necessitate a higher initial investment than conventional cards.

Market Opportunities

Blockchain has Enabled a New Mode of User Information Security

Blockchain is a ground-breaking technology enabling businesses to create fast, secure apps that meet stringent security requirements. Smart cards can efficiently and securely manage cryptographic keys, making blockchain transactions more efficient and safe. They store cryptographic keys in vaults. The keys stored in smart cards can be matched with keys stored in online libraries when connected to the Internet through POS readers. Users are authenticated when the match is successful. This is expected to help banks and other players in better securing and authenticating users' identities, reducing the number of cases of cyber theft.

Regional Analysis

Due to growing demand in transportation, BFSI, retail, government, and healthcare sectors, Asia Pacific is expected to hold the largest market share over the forecast period. Furthermore, the region's telecom and e-commerce sectors contribute to the smart card market's growth. Due to the increasing internet penetration in developing countries such as China and India, the Asia Pacific region is expected to grow at the fastest rate.

On the other hand, North America is expected to be a less appealing market due to the region's mature smart card market. Several states in the United States are considering implementing smart card programs in various government applications, including the Department of Motor Vehicles and Electronic Benefit Transfers (EBT). Smart cards are used in multiple industries, including GSM digital cellular phones and TV-satellite decoders.

As the European healthcare sector increasingly uses smart cards for both patients and healthcare providers, the market in Europe is expected to grow at a healthy rate.

Segmental Analysis

Type, component, access type, industry vertical, and geography can all be used to segment the smart card market share. The market can be divided into contact, contactless, and dual-interface smart cards. According to the end-users, the market can be split based on its use into government, retail, healthcare, financial services, transportation services, government, and others. North America, Europe, Asia-Pacific, Latin America, and the Caribbean (LAMEA) make up the global smart card market.

The market can be segmented into contact-making smart cards and contactless smart cards based on type.

Contact smart cards are inserted into a smart card reader or swipe machine, making physical contact with the reader, and then they can make transactions.

In the Global Smart Card Market, the Contactless Communication segment held the largest market share. A Contactless smart card contains an antenna that allows communication with the reader without making physical contact. You tap and pay. Contactless communication is simple and convenient. Due to the recent pandemic, it has become a widespread trend. It takes significantly less time to complete the transactions. The contactless smart card connects to the reader via radiofrequency technology. Smart cards are becoming more popular due to their ease of use, versatility, and speed.

A dual interface is a smart card with a single embedded chip that can make contact and contactless transactions. The "contactless" part refers to the fact that it contains an RFID or NFC chip that allows it to read the card's identifying information and make payments using radio-frequency identification (RFID) or near-field communication (NFC) technology. Because the "contact" part can be used with physical readers, either via a magnetic stripe or by dipping the chip into an EMV reader.

Impact of covid-19

The pandemic had caused a lockdown in almost all the countries across the world backed up by strict government regulations such as social distancing and quarantine. A severe effect of the lockdown was observed on the economy of various countries which further canceled certain construction projects temporarily or permanently.

Further, immediate long-term effects were seen in the supply chain and the deployment of smart solutions required in the smart buildings. However, the ease offered and the multiple benefits of the smart building solutions are anticipated to increase the deployments during the time.

Recent Developments

• In May 2022, FirstBank Taps CPI Card Group® for Card@Once® Instant Issuance Solution.
• In May 2022, IDEMIA and Telefónica España boosted the security of 5G SIM technology with pioneering solutions to protect users' communications.