Trend

A smart card for everyone

The smart card base in India is estimated at about 70 million. This is projected to cross 400 million in the next few years, says Chirasrota Jena.

Thanks to promotions by MasterCard and Visa which introduced smart cards in the market, contact-less smart cards have become the talk of the town when it comes to payment applications. Near Field Communication (NFC) devices with embedded contactless smart card capabilities are on the way. Overall, Indian smart card usage is below that in other developed and emerging economies, but as the cost of smart cards decreases, Indian companies will increasingly invest in the technology and its solutions.

"The acceptance and uptake of personal technologies by the Indian public is amazing" - Bratin Chakravorty GM, Technology Solutions Keane Inc

Says Bratin Chakravorty, GM, Technology Solutions, Keane Inc, “As presented at the recently-concluded Smart Card Expo 2006 in September, the current smart card base in India is estimated at about 70 million. This is projected to cross 400 million in the next few years. The general awareness of smart cards and its applications have increased. However, if you rule out the GSM industry, where smart cards in the form of SIMs (Subscriber Identity Modules) are a de facto necessity, segments such as transport-transit, healthcare and banking are lagging behind.”

Adds Sourabh Kaushal, Industry Manager, ICT Practice, Frost & Sullivan India, “In 2005, the market was $66.6 million, exhibiting a growth of 40.3 percent over 2004, and is expected to reach $248 million by 2009.” The smart card market in India is spread across a few major applications, the most prominent among these being the SIM in the cellular industry. The country has a predominantly GSM (Global System for Mobile)-based mobile network, which requires the SIM. This segment has been growing rapidly and has been offering tremendous potential to the smart card industry in India.

Inside a smart card

"We are among the world's top three suppliers of smart card ICs, and the same holds true for India as well" - Pradeep Kumar Marketing Head STMicroelectronics

The first smart cards were simple semi-conductor products containing a small non-volatile memory and some logic circuitry. They were introduced for pre-paid telephone card use. Microprocessor-based cards started slowly to gain acceptance in French banking and pay TV, and have, for the last three to four years, been booming in the GSM-phone SIM and electronic purse applications. In geographical terms, Europe will remain the largest smart card market for the next five years or so, but the globalisation of the market is well underway. Smart card chips are the essential operational components of smart cards, and these also appear in cladding other than credit card-sized plastic tokens. SIMs, initially implemented with simple, single-application smart card chips in a smaller physical format, are already incorporated in all GSM handsets; new developments incorporate smart chips within a variety of other devices such as PDAs and wrist watches. Comments Pradeep Kumar, Marketing Head, STMicroelectronics, “As of today, SIM is the dominant market for smart cards in India. This is likely to continue in the future as well. Growth will be fuelled by the rapidly increasing cellular requirements in small cities and rural areas. The mobile market has been witnessing stiff competition which has helped increase penetration.”

The Indian scenario

Indian companies are presently working with the government on different projects that involve the implementation of smart cards. STMicroelectronics has traditionally been a semiconductor supplier providing chips to card manufacturers and system integrators. In the recent past ST has acquired Proton World International (PWI), a leading smart card software company that specialises in high security, payment and identification smart card systems. PWI develops smart card system software especially for e-purse; MasterCard or Visa debit and credit cards; Public Key Infrastructure security; and data management applications. STM has also acquired Italy-based smart card manufacturer Incard. With the acquisition of these companies, ST has been able to provide the latest offerings to its customers across the globe, including India. Informs Kumar, “We are among the top three suppliers of smart card ICs in the world, and the same holds true for India as well. We are major players in GSM, DL (driving licence), e-passport and banking applications in India. STM provides the smart card chips or modules memory and microprocessor for both contact and contactless smart cards and smart card reader ICs.”

The Keane India team is part of the company’s global smart card initiative, and is presently working on a project for the Transport Ticketing Authority (TTA) of the state of Victoria in Australia. Keane’s focus is transit ticketing as part of a holistic approach to modern living. This allows for fast deployment, swift operations, and reduced load on various modules. Building blocks can be changed and customised as per the customer’s preferences without affecting functionality or ease of operations.

"In the future, we anticipate that smart card transportation solutions will be integrated with vehicles" - Vipin Tyagi President & CEO Network Programs

Meanwhile, Network Programs is currently working on a number of projects in the smart card domain with a large Fortune-500 company based in Japan. The scope of these projects involves understanding, testing and optimising a smart card OS. In another project, the company is discussing the development of a multi-lingual integrated access entry and control system capable of utilising technology from multiple vendors. Although most players have deployed their solutions in different countries, they are taking part in pilot projects in India.

The smart card market in the country is emerging in banking, transportation and telecom. Notes Vipin Tyagi, President and CEO, Network Programs: “From a solutions point of view, smart cards are used for applications related to payments, identification and access. Private banks are driving smart card usage, and, of late, we see state-owned banks rolling out smart card-based solutions for cash transactions, user identification, and payments. In transportation, smart cards are used in a variety of solutions such as toll collection. In addition, a number of government agencies have introduced smart card technology while issuing drivers’ licences.” Secure identification is another emerging area.

The Indian angle

India poses some unique challenges when it comes to smart card technology and its use. That said, some issues are global in nature. Chakravorty finds “the opportunity to achieve critical mass rapidly exciting, and the acceptance and uptake of personal technologies by the Indian public amazing.”

One of the key limitations of smart card technology remains the widespread use of proprietary technology. Cards from one manufacturer will not work with equipment from another, and users are locked into a single vendor. For larger organisations that operate several facilities across cities or countries, it is difficult to optimise solutions that work everywhere. It also locks in a company to one vendor’s technology and solutions, making upgrades expensive and difficult. Once the market settles on interpretative standards and solutions, demand will increase proportionately.

The biggest bottleneck remains lack of awareness and thereby acceptance. The masses are oblivious to how smart cards can benefit them, and cash continues to be the preferred means of transaction in India. Even though the educated segment of society has accepted smart cards, the technology is still under scrutiny. Moreover, there is lack of adequate infrastructure to push the development of smart cards and induce more innovation. Cost remains an issue. These hurdles will diminish over time, so the future for smart cards and smarter solutions is considerable.

Emerging trends

From a technological perspective, trends include improved memory, more sophisticated applications, and integration with traditional information systems. Network Programs anticipates a significant enhancement in the technology leading to more diverse and robust solutions, plus higher volumes which can reduce the cost of deploying these systems. States Tyagi, “In future we anticipate the integration of smart card transportation solutions with vehicles. The telematic solutions include toll payment, vehicle identification, tracking and other commercial applications. The introduction of new technologies in mobile chips embedded with mobile phones has enabled new smart card applications.” Major applications include payment, identification and access control. Across all sectors we have seen high demand for access control and entry to physical facilities tied to the integration of resource management.

The smart card market in India is poised to see greater maturity in terms of technology upgradation. It is gradually drifting towards open platforms, minimising entry barriers and resulting in the creation of an open, dynamic and competitive environment with greater choice when it comes to suppliers.