Approaching 400 million smart cards used in transportation, but is NFC the threat on the horizon?

The volume of smart cards sold for use on mass transit systems is estimated to have approached 400 million in 2011; and announcements such as those last week from the UK government to extend the Oyster card nationwide, are aiding in cementing transportation as the 4th largest smart card application, behind SIMs, payments and government ID.

Alex Green, Sr Research Director, Financial & ID Technology Group, IMS Research

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The volume of smart cards sold for use on mass transit systems is estimated to have approached 400 million in 2011; and announcements such as those last week from the UK government to extend the Oyster card nationwide, are aiding in cementing transportation as the 4th largest smart card application, behind SIMs, payments and government ID. But how much of a threat does NFC pose to this market? This is one of the issues that I will discuss in IMS Research’s soon to be published report on the transportation card market.

Over the next five years, more than two billion NFC enabled handsets are forecast to be sold to consumers. Over this period many mass transit system operators will start to allow travellers to use their NFC handsets, as well as, or in place of, smart cards when accessing transport services. It goes without saying this this high level of success for NFC will no-doubt have a negative impact for the transportation card market.

That being said, there are around 200 systems globally that are at present using smart cards or other ISO 14443-based technologies (e.g. one-time-use tags) for transportation ticketing, and that number is forecast to grow. So it’s my view that although NFC is forecast to have some negative impact, this is not projected to be immediate and with this huge number of systems globally, the market will continue to grow for some time yet.

Indeed over the coming years, the battle amongst the standards is forecast to heat up. NXP’s family of MIFARE standards has enjoyed huge success in this market to-date, and we forecast this will continue; however, with the OSTP Alliance membership growing and a wider choice of technologies becoming available, MIFARE’s dominance will at least be tested.

IMS Research’s report “Smart Cards in Transportation – World – 2012” will address these issues on a country by country and operator by operator basis. For more information please contact me at  Alex.Green(at)IMSResearch.com, or +44 1933 402255 or visit our website at www.IMSResearch.com.