Smartcards: Volume drives its growth

The smart card industry in 2012, was predicted to hit the one billion dollar mark in 2015. At the mid-way of the projected year the industry seems to be well on course to exceed the target with several large volume opportunities being generated by the Government schemes aimed to reach out to the poor and ensure the subsidy disbursement is driven through accountability enabled smart cards. 

 

A study back in 2012 forecasted the smart cards ‘to further percolate into a number of other sectors such as credit/debit cards, financial inclusion, public distribution, healthcare, identity management, transportation, etc.’ apart from the telecom sector, which represented the biggest application sector in 2012, accounted for more than 70% of the total market volumes.

 

The study further stated that ‘In contrast, the National Population Register, which is expected to represent the biggest application segment in 2018, is expected to account for less than 31% of the total market volumes by 2018.’

 

The latest news of Aadhaar card becoming the world’s largest bio-metric identification programs in the world with the Unique Identification Authority of India (UIDAI) issuing nearly 82 crore cards covering nearly 67% of the population, is proof of the projected estimates for the smart card industry being on track.

 

Opportunities

The multitude of Government projects for citizen identification like the Aadhaar and benefit schemes like the recently initiated Pradhan Mantri Jan- Dhan Yojana, Rashtriya Swasthya Bima Yojana (RSBY), National Rural Employment Guarantee Scheme (NREGS) and Public Distribution System (PDS) along with driving licence, e-passport, e-visas and transportation services (e.g. Metro rail project) are some of the government projects that are expected to created massive opportunity for the smart card printing industry.

 

“On an average 600,000 bank accounts are being opened everyday” said V Natarajan, CEO of Aura Print Solutions who represents card manufacturing major NBS technologies in India. “800 million accounts will be opened under this scheme before the end of 2016 with each account holder issued a unique debit cards” he added.

 

Apart from the Government driven projects, telecom still maintains its huge share in SIM card market and several other private domains like banking (driven by mandatory EMV cards), business loyalty cards, National ID, Health Insurance Card, lottery( scratch card) etc, will be key areas for the growth of this sector.

 

Prominent factors responsible for the growth of the smart cards market in India would include increasing mobile penetration, demand for plastic money in tier-II and tier-III cities/towns, as well.” said Natarajan.

Challenges

There are several key challenges that ride with the monstrous growth potential of the smart card industry.

 

“This is a unique industry with variable data printing and data management based print solutions going back to the 1980s, when the plastic card made its humble beginning , which it was for very niche account holders," explained Natarajan.

 

One of critical challenges for the industry remains the declining prices of the end product, the smart card. This is attributed to two factors, first of which is the increasing production volume which substantially reduces the costs of smart cards. Further, prices are also affected due to a significant drop in the prices of chips used.

 

One of the study also points to ‘a number of government projects such as the e-passports, EPFO, etc getting delayed or cancelled due to problems like lack of funds, technical issues, legal wrangling etc.’ 

The study also points to a ‘Lack of standards to ensure inter-operability among varying smart card programs like mobile service providers, transport operators like the ‘Delhi Metro’ and banking systems etc’ and implores them to ‘converge their efforts regardless of their different business objectives i.e market must be stable and based on proven and trusted standards.’

 

If we have to be concise the definition of Smart cards, it is “managing the data in a secured way and have output in the form of a Plastic Card” security, identity, data management  and enable transaction is the rule of the game and this makes it slightly more difficult for new entrants.

 

Market Adoption

The predictions of a billion dollar market ensured several players entering the market early and seizing the initiative.

 

Talking about the smart card industry as one of the early entrants Gautham Pai, group managing director of The Manipal Group says, “While working with banks for cheque printing and security printing, we saw the use of plastic money (debit and credit cards) picking up. Five to six years ago, the usage of these cards was very low but was exponential. We did not look at the printing side of this shift, instead allied with a company who could help us set up operations for the plastic cards very quickly. We had the customer base plus respect and reputation with the banks.”

 

The market also opened up export opportunities with Chennai-based Madras Security Printers (MSP) capturing majority of the African market starting from 2011.

 

A market leader in smart card manufacturing, MSP has executed several e-governance projects for both the Central and the state governments, including e-PDS cards and voter ID cards in Tamil Nadu.

The market though is slowly but steadily expanding beyond the big names and the exponential growth of the market makes it one of the domains to consider serious investments in.