The dominance of four companies can be seen explicitly in the global smart card market. NXP Semiconductors NV, Gemalto NV, Infineon Technologies AG, and Giesecke & Devrient (G&D) GmbH are the leading players, which hold dominant share in the global smart card market. Some of the new entrants such as Watchdata and Eastcompeace Technology Co. Ltd. are making significant efforts to give a tough competition to the existing players in the market. New players are providing solutions based on consumer preference.
The global smart card market stood at US$8.5 bn in 2016. Due to increasing technological changes, the market is expected to reach US$14.1 bn by the end of 2023. Due to consistent growth and increasing use of smart cards, this market is estimated to rise at a CAGR of 7.4% during the forecast tenure between 2016 and 2023.
The significant contribution made by contactless smart cards will help the market to grow at a healthy rate. The contactless smart cards is a segment under the types of smart cards available in the market. On geographical note, Latin America has gained its momentum in the last few years and shows more than 70% of market penetration. Asia Pacific is also considered among the prospective regional destinations for growth in coming years.
The use of smart cards is considerably rising across various industries such as BFSI, telecommunication, e-commerce, healthcare, and retail. Among these, the telecommunication sector is likely to exhibit high demand for smart cards. Moreover, the exponential rise of mobile phone subscribers and increasing penetration of mobile phones in emerging economies will further benefit the global smart card market.
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There are number of factors significant for the growth of smart cards. One of the major factors is high security provided by the smart cards. The current smart cards have EMV chip on chip that provides an extra level of security and protects information of the user. In addition, increasing use of near field communication (NFC), net banking, internet of things, and e-commerce that have grown the demand for smart cards at a higher rate across the globe. Thus, these factors are expected to fuel the demand for smart cards in coming years.
Conversely, there are factors that may hamper the growth of the market. One of the major factors is high initial cost incurred while shifting to smartcard compatible readers. However, the high cost incurred is initial and one-time expense and is expected to overcome with time. While the increasing adoption of digital wallets may hamper the growth of the market to some extent, the security features offered by smart cards is expected to pick up traction fueling market growth. Moreover, decreasing cost of microcontroller based smart cards and rising use of contactless smart cards in the financial services sector will benefit the growth of the smart card market at the global level.