So what’s in store for the future? Strong growth and broader deployments. The Frost & Sullivan Americas Smart Card Market Analysis report published in September predicts that the smart card industry will grow rapidly in North America, at a 27.7% compound annual rate over the next five years, from the 132.2 million cards shipped in 2004. Let’s look at a few of the applications that are fueling this growth.

Contactless payments are the most important card payment innovation in the last decade. Significant numbers of contactless cards are being issued by major card issuers such as Chase and MBNA; the number of top-brand merchant locations accepting contactless payment devices is increasing rapidly; and consumer usage is steadily increasing. Over the next year, we expect to see continued, significant growth as well as the introduction of other market innovations alongside contactless payment that are made possible by the use of the smart chip technology, such as loyalty, rewards, and other value-added offerings.

For secure identity applications, smart card technology – both contact and contactless – is now the standard. In both government and enterprises today, the convergence of logical and physical access control systems is recognized as necessary to provide improved security and uniform security policy enforcement. For the U.S. government, HSPD-12 made this convergence mandatory, requiring a common smart card-based identification credential for all federal government employees and contractors that is to be used for both physical access to federally controlled facilities and logical access to information systems. Large leading-edge enterprises such as Boeing, Microsoft, Sun Microsystems and Johnson & Johnson have also been migrating toward the use of smart cards for physical and logical access control authentication.

In citizen-facing programs, the U.S. State Department will begin issuing e-passports that include a contactless smart chip in early 2006, with all U.S. passports equipped with the new technology by October 2006. The REAL ID Act of 2005, recently passed by the U.S. Congress, mandates federal requirements for driver licenses, requiring a standard machine-readable technology that will securely store the driver’s information that is printed on the license so that it can be validated. This opens opportunities for contact smart card technology as a proven, secure, cost-effective and reliable solution that is already being used as a standard within the federal government. Plus, expanded pilots for secure identity credentials for frequent travelers are also planned through 2006.

The bottom line – the broad deployment of smart card technology in the coming years will benefit government, businesses and consumers as they realize improved convenience and improved security in all types of transactions.

Visit the Smart Card Alliance on the web at www.smartcardalliance.org.

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