Dataquest says smart card market to quadruple by 2001

Usage of smart cards, or stored-value cards which can be used for purchases and banking transactions, is tipped to grow four-fold by the year 2001.

Usage of smart cards, or stored-value cards which can be used for purchases and banking transactions, will grow four-fold by the year 2001, according to market research firm Dataquest. By the end of 1996, 774 million chip cards will ship, and 3.4 billion cards are expected to ship in 2001, according to a new Dataquest study entitled "The Exploding Market for Chip Card Semiconductors."

Smart cards, which are used in lieu of cash and credit cards for small and large purchases, are the fastest growing segment of the chip card industry, according to the report. In 1995, 84 million smart cards were sold, a figure which is expected to rise to 156 million by the end of this year. By 2001, 1.2 billion smart cards are expected to ship, according to the study.

European nations, which have been using stored-value cards for phone calls and other minor transactions for the past several years, led the pack in chip card usage with 90% of total card sales in 1996, according to the study. However, Dataquest predicts that other regions will catch on to the chip card craze in 1997 as consumers look to simplify their banking and shopping transactions with one card that does it all.

Although some standards, software and infrastructure issues remain to be resolved, chip cards promise to be "one of the world's highest-volume markets for semiconductors," Jonathon Cassell, an analyst in Dataquest's semiconductor application markets worldwide programme, says.

Smart cards include at least one microprocessor or microcontroller and offer more functionality to consumers than memory cards which don't include such chips, according to the study. Memory cards can contain other types of logic, such as security or cryptography features.

Smart cards offer semiconductor and card manufacturers a high profit margin because of the high cost to consumers and merchants to use the devices. On the flip side, this high cost is what may be holding back widespread usage in countries outside Europe, where costs of cards are relatively low and many vendors and phone booths already have processing systems in place, according to Dataquest.

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