CARTES in Asia offers enhanced opportunities to smart card and payment industry

FRANCE: One of the major drivers for the smart card industry worldwide remains its applications covering financial services (including retail and loyalty). Growth in the global payment card market, especially in the Asia-Pacific region, continues to drive the shipments of smart cards worldwide. Companies exhibiting at CARTES in Asia 2011, will benefit from a booming economy and strong demand for digital security in APAC countries.

The EMV (Europay MasterCard Visa) migration in Asia is accelerating as a result of its acceptance as a global standard. In APAC, the growth rate of EMV chip cards over the past two years has exceeded 70 percent, whilst having reached over 150 percent on the EMV POS acceptance side.

Migration to EMV in Asia is driven by fraud prevention (across the region), government mandates in specific markets such as Malaysia (2006), Korea (2008) and Indonesia (2010). Competitive differentiation between banks in markets such as Taiwan, Korea and Malaysia is also fuelling the introduction of multiapplication cards in the region.

More banks in new EMV markets such as Hong Kong and Australia are now in full migration mode. South Korea for example passed an EMV mandate in 2005, requiring that all banking cards issued be EMV-compliant chip-based cards. It is no surprise that the banking sector makes up the biggest portion of the smart card market, accounting for 40% –18.7 million units– of total shipments in 2009.

Contactless functionality is also increasing demand across APAC, particularly in markets such as Malaysia and Korea, with contactless for tranport as well as retail payments. Although physical access control and transport automatic fare collection applications still dominate the contactless smart card market, end-users are beginning to explore and develop contactless technologies for new applications.

These include card associations and their member banks, for fast and convenient low value transactions at the point-of-sale, and government agencies for long life ID cards and travel documents that offer increased security and convenience to citizens.

In Japan, 73 percent of mobile phones now include contactless Felica chip. Do Co Mo, the leading mobile service provider, has launched its “Osaifu-Keita” (mobile phones with wallet functions) enabling transportation pass, loyalty card, entertainment ticket or discount pass, electronic wallet and home key applications. Demand for “Osaifu-Keita” has exceeded 30 million and nearly one million shops and restaurants take this means of payment.

The Asia-Pacific region is the leading market for mobile payment adoption. Gartner has released a new report with the number of users in the region predicted to increase by 50 percent from 41.8 million last year to 62.8 million by the end of 2010.

Sandy Shen, research director at Gartner explains that service providers have played a pivotal role in the region’s mobile payment boom, offering users the payment functions they want, while at the same time creating the right ecosystem and infrastructure to sustain and satisfy demand.

Gartner’s figures show that short message service (SMS) is the dominant mobile payment technology in the region, but the research firm is urging financial institutions not to overlook NFC as a viable future alternative.

In China, the mobile payment market is expected to grow dramatically in the next two years, with the number of users exceeding 100 million by 2011, according to The Global Times. 785 million people are now using mobile phones in China - just over half of the population - many of whom are not accustomed to using bank cards for transactions.

Mobile payment therefore offers a natural alternative to cards and cash, and we can expect to see solid market growth in China over the next few years. Watchdata has already sold over 500,000 mobile payment SIM cards this year, and is expected to ship 700,000 more by the end of 2010.

Major exhibitors have already engaged their participation in the next CARTES in Asia to benefit from this dynamic market. Earlier this year, American Express attended and presented at the inaugural conference for CARTES in Asia and plans to exhibit at CARTES in Asia 2011.

“It is a great time in emerging payments and Asia is on the forefront of new payment technologies such as contactless and mobile. American Express would like to partner with key industry players to provide emerging capabilities for our issuers and acquirers. CARTES in Asia 2011 provides an opportunity for us to interact with the payments industry across Asia,” said Patricia Partelow, VP for Emerging Payments at American Express.