Contactless Smart Card Orders Flood In | IDTechEx Research Article
In the last few weeks alone, orders for well over US$100 million of contactless (ie RFID) smart cards and associated systems have been placed. The business is surging forward with the percentage of smart cards that are contactless rising to 16% of deliveries in 2007 after having been stuck at around 5% for the preceding twenty years. Learn more.
Jan 22, 2007 Dr Peter Harrop
In the last few weeks alone, orders for well over US$100 million of contactless ie RFID smart cards and associated systems have been placed. The business is surging forward with the percentage of smart cards that are contactless rising to 16% of deliveries in 2007 after having been stuck at around 5% for the preceding twenty years. One can even foresee the day when those buying smart cards with contacts will be asked to explain themselves. Something intolerant of this slightest amount of moisture or misorientation, that has to be put in a slot the right way up and the right way round and that has more ways in for the criminal (all those contacts) - that was certainly not the vision of the inventors of the smart cards nearly 40 years ago. Why use it? The lame reply about having the old infrastructure and not being able to afford the contactless one is the nearest to a valid excuse. A high proportion of new purchasers now seek the lower cost of ownership and the user friendliness of contactless cards and the orders are flooding in. Here are some examples.
CPI Card Group and Inside Contactless have been chosen by Visa Latin America to provide such cards and technology for three major banks in Guatemala. As part of the Visa Smart Breakthrough program, CPI Card Group has issued over five million contactless cards in the US. The contactless cards, manufactured by CPI and with the MicroPass chip from Inside Contactless, will be issued at Banco Uno, Banco Custcatlan and Bi-Credit.
The Large Projects Division of ERG Group of Australia has signed a contract worth US$20.55 million for a smart card based payment system for Manila, in the Philippines. Signed with First Versatile Smartcard Solutions Corporation, a private investor in public transport and cashless payments, it will involve the issuance of 500,000 contactless cards for purchases in Manila, followed by a transit application for use on public transport in the greater Manila Region, but that is only the beginning.
The system will be implemented on the light and metro rail systems in the City of Manila, later expanding to rail and buses in the Luzon region. The contract includes the installation of 200 Point of Sale POS devices. These will be used for reloading value onto cards and to enable cashless purchases to be made. 20 ticket vending machines and 50 gates will be installed at railway stations.
ERG has also finalised a US$26.87 million agreement with transport operators Azienda Tramvie ed Autobus del Comune di Roma (ATAC) and Compagnia Transoprti Laziali - Societa regionale S.p.A (CoTral) in Italy to supply a smart card based ticketing system in the Lazio region around Rome. Available to the public from mid 2007, the scheme will expand to its full implementation by early 2008. It will allow patrons to use same smart cards within both the city of Rome and Lazio region.
ERG will install equipment on 1,627 buses. This will locate the vehicles and communicate in real time via GPRS to the CoTral Operations Centre. It will also process the electronic tickets and smart cards. 100 mobile inspection devices will be supplied and 1,200 POS terminals will be installed to allow customers to purchase electronic tickets and load additional value on the contactless cards. 48 bus depot computers will be linked to a central clearing and processing computer system for settlement of accounts of various service providers.
Dubai International Airport has recently awarded Eastnets and Zebra Card Printer Solutions a contract to provide card management and issuance of contactless cards. These cards will be used on new electronic "eGates" in the airport, designed to reduce delays and give registered passengers automated entry or exit through the airport. Zebra printers with NXP Mifare cards are involved with 100,000 cardholders enrolled to date. Over 25 Zebra Card Printers are now being used at the airport to produce the contactless smart cards necessary to accelerate immigration procedures and enable passengers to merely swipe their cards and have a three second fingerprint scan.
The Washington Metropolitan Area Transit Authority has awarded a US$11.58 million contract modification to Cubic Transportation Systems, Inc to implement software and technology upgrades merging the Metropolitan Area rail, park-and-ride and regional bus systems through a common smart card and a centralized transaction processing and reporting back-office system. Enhancements will include new contactless card readers at all Metro subway and parking facilities, expanding the SmarTrip regional smart card system. The upgrades will increase efficiency and save the agency millions of dollars in annual operating costs.
Of course, the largest contactless smart card project of all is the national ID card for China where they are racing to issue 900 million to most adults by the time of the Olympic Games in 2008. That means $1.2 billion of readers and $2.25 billion of cards, deliveries peaking in 2007 at 250 million cards if you believe Eurosmart or 300 million if you believe IDTechEx. With the massive city card schemes rolling out in China, this may make China the world's largest market for RFID by value in 2007, though this will be short-lived as the biggest schemes saturate. Nevertheless, many other contactless card schemes are on the way in China, so it will stay one of the largest markets for RFID. For example, China Expert Technology has received a US$57 million order for e-government systems in Fuzhou City in the Fujian province. It includes design and implementation of a contactless card security system.
There is much more to come. For example, the high technology New Songdo City being built in Korea at a cost of $25 billion will have universal contactless smart cards to pay bills, access medical records and open doors. If it uses a contactless interface for all of these things it will be progress indeed because health cards, though being issued in tens of millions worldwide are almost all of the unreliable, short lived user unfriendly variety, meaning they have contacts.
After the great success of contactless cards in World Cup football in Germany, the Netherlands and the UK keen followers in this application. For example, at the end of 2006, London-based premiership football club Fulham started to issue contactless cards to fans to cut queues at the turnstiles. This will boost safety. A new card has been developed for use by the club, containing specific data on football matches that the cardholder has paid for. The card can be updated by telephone.
20,000 of these new cards have been issued to members and season-ticket customers. 46 Smart Card readers have been installed on turnstiles at the club's grounds. Fulham's head of IT, Matthew McGrory, says, "The old system took, at the best of times, ten to twenty seconds per season ticket holder on the turnstile," he said. "That is now down to four seconds."
Credit, debit, account and stored value cards from banks
The success of contactless card payments in the USA in 2006 was been such that Visa described its Visa Contactless product as "one of the most rapidly adopted payment innovations in Visa history". Since contactless bank card payments were first introduced in earnest in 2004, over 13 million MasterCard, Visa and American Express-branded cards have been issued. They are accepted at over 30,000 US merchant locations. Chase, Citigroup and Wells Fargo have led the way.
The market potential is huge - research by McKinsey, commissioned by MasterCard, indicates that about 2.5% of all cash transactions in Europe currently fall between €5 and €15, (about US$7-18) and that around 40% of these could potentially be carried out by card.
Such was the success of its UK contactless card trial in 2006 - which found that using a contactless card could have transaction times to less than five seconds - that MasterCard announced in November 2006 that it would be extended to the bank's London offices. Further, a MasterCard trial will be conducted in Toulouse, France, to test an EMV-enabled multi-application RFID card. MasterCard will work with LaSer Confinoga. Galeries Lafayette and Monoprix stores throughout the city.
Visa has also recently announced that it will roll out contactless cards in Europe in 2007 concentrating its efforts initially on London. With Barclays Bank and Transport for London it will introduce an integrated travel and payment contactless card, which customers can use to purchase items under £10 (about US$19) and to replace Oyster travel cards on the city's underground and bus services.
Visa finds that London has all the pre-requisites for use of contactless stored value bank cards, including a high level of commuters using public transport, a large student population, residential areas, offices, a large penetration of target merchants and the 2012 Olympic games coming up (of which Visa is a sponsor).
For more read Contactless Smart Cards and Near Field Communication 2007-2017 and attend RFID Smart Labels USA 2007, Boston, Feb 21-22 with dedicated smartcard/NFC lectures.