Smart Card Reader Market Size, Report 2031

Report Description

The global smart card reader market size was valued at around USD 14.37 Billion in 2022 and is projected to reach USD 20.63 Billion by 2031, expanding at a CAGR of around 4.1% during the forecast period, 2023-2031.

The growth of the market is attributed to the upsurge in adoption and demand for smart cards for various applications including contactless payment transactions across the globe.

Get Free Sample Report

A smart card is a plastic credit card that incorporates an installed coordinated circuit that can be either a safe microcontroller or a memory chip. Smart cards have a huge storage capacity to store enough information and do validation and encryption. The electronic device that is used to read smart cards is known as the smart card reader. Smart cards are widely adopted for several purposes.

It serves as a reliable and secure token for personal identification, control of accessing data, authentication, and application processes for cardholders across the diverse end-user industry. It also provides secure and fast financial payment transactions including both contact and contactless payments services. The rapid digitalization and surging concerns of security over users’ credentials increase the adoption of smart cards.

Smart cards find their prime applications in various industries such as sim & telecom, BFSI, financial, government & health, transportation, retail & gas, loyalty, and others. Additionally, the surging usage in transportation payments as well as user verification in buses, airplanes, and railways fuels the increased demand for smart cards. On August 2020, the Delhi Government, of India introduced smart cards for daily metro commutes for personal identification purposes. Furthermore, the subscriber identity module, SIM is a micro-controlled based smart card that is extensively used in mobile phones.

COVID-19 Impact on Smart Card Reader Market

The emergence of COVID-19 pandemic has affected the smart card market in the first half of 2020 to some extent. The subsequent lockdown and several restrictions imposed by the governments resulted in the disruption of the supply chain in the smart card market. This led to limiting the manufacturing and product capabilities among the key players. There has been a decline in the growth of sales of smart cards which hampers the business expansion of the overall smart card reader market.

For instance, IDenticard Systems company, Brady Corporation, reported a 9.1% decline in its IDS segment, which consists of smart card applications for healthcare services. However, the smart card industry began to reshape its growth track during the second half of 2020, owing to the growing usage of contactless cards for payment transactions across stores, hospitals, transportation, restaurants, and other payment technique services.

In fact, digital user credentials play a vital role in healthcare management services during the pandemic. For instance, according to the Centers for Medicare & Medicaid Services, US healthcare expenditure is anticipated to reach around USD 6 trillion by 2027. Moreover, the COVID-19 crisis has pushed several nations to develop vaccination-proofing plans, which are also attributed to aid the overall smart card market growth.

Smart Card Reader Market Dynamics

The smart card reader market report presents a complete overview of market dynamics by focusing on the current market trends, existing drivers, growth opportunities, and emerging challenges that can shape the outcome or overall performance of the market during the forecast period, 2023 to 2031.

Get Free Sample Report

Major Trends

Ongoing technological advancements

Major players in the smart card market are continuously focusing on providing technologically advanced product capabilities and business expansion. The ongoing advancement in technological innovations is currently trending in the smart card market. Key companies are largely implementing technology-based cards into their products such as RFID, memory technology, Wi-Fi RTLS, Bluetooth tags, integrated circuits, and others to build security, convenience, and confidentiality for consumers.

Key Drivers

Surging adoption of digital payment modes

Amid the subsequent lockdowns, people are forced to stay in their homes, due to the increased risk of infecting the virus. The pandemic scenario has limited contact among consumers and encourages the digitalization of business and other activities. There has been surging adoption of contactless payment transaction techniques while purchasing and selling goods including household items and groceries, owing to the pandemic situation. In May 2020, as per the Fiserv (US) report, people consider the contactless (tap-and-pay) payment technique as the safe and fast way to pay.

In fact, smart card-based payment transactions are highly encrypted and ensure improved convenience, easy management of financial records, and secure financial transactions over traditional cash-based payments. Thereby, smart card-based digital payments are increasingly adopted by a number of individuals resulting to drive the overall market growth.

Additionally, the extensive adoption of e-commerce retails for purchasing and selling goods and services influences the usage of smart cards to a great extent on a daily basis. Furthermore, smart cards are utilized in digitalized payment services including paying utility bills, electricity bills, prepaid mobile recharges, and others.

Increasing requirements for financial security raise the adoption of smart cards

Smart cards comprise a tamper-resistant microprocessor with substantial processing power that provides secure data storage and a set of encryption capabilities. Using smart cards ensures high confidentiality, integrity, and security of the information. In fact, smart cards are considered one of the most reliable and secure forms of electronic identification tokens.

Thereby rising awareness about the benefits of using smart cards coupled with increasing requirements of security over user credentials drives the sales of smart cards and hence propels the overall market growth. Smart cards find their wide applications across diverse end-user industries including healthcare, banking and finance, and e-commerce retails among others, as a secure technique in financial services.

Existing Challenges

High initial investment for the smart card business

The initial setup of the smart card business requires high investment as the readers and chip used in smart cards for access control and another application requires high-quality products to offer highly sophisticated capacities and smooth functioning. Additionally, deployment of these chips and readers involves additional costs resulting in increasing the overall cost.

For instance, the average cost of smart card readers ranges from USD 50 to USD 300. Thus, equipping multifunctional high-capacity smart cards and employees is anticipated to increase initial investments as compared to conventional cards, and this in turn leads to restraint of the overall growth of the market.

Emerging Opportunities

Surging adoption of smart cards in the healthcare sector

Smart cards are extensively adopted for hospital identity credentials such as photographs, PIN, or through biometrics on the card. It is also utilized to access information regarding patient and payment transactions. Identifying patients in real-time is the best method for confirming the incoming person’s smart cards and are highly reliable and secure mode for identifiers.

Additionally, it offers cashless payment transactions at hospitals and clinics and lessens the burden of having cash. Using smart cards improves security and high confidentiality and is considered the most secure access mode.

Smart cards aid healthcare workers in maintaining and controlling the efficiency of patient care and privacy safeguards. The utilization of smart cards also assists in the safe storage of information and data about a patient’s medical history and instantly enabled control of access to the information while also facilitating the provision to update if required. This minimizes the risk of healthcare fraud, hence driving the overall market growth of the global smart card market.

Increasing initiatives and development

Key manufacturers in the smart card market are increasingly focused and enable several product capabilities and developments leading to business expansion. The increasing investment by several agencies, governments, and partnerships among the companies further upgrades the growth opportunity of the market. For instance, Hong Kong-based smart card operator company Transit launched its transit cards that covers payment transaction for public transport such as rails and buses on April 2021.

Scope of the Smart Card Reader Market Report

The report on the global smart card reader market includes an assessment of the market, trends, segments, and regional markets. Overview and dynamics have also been included in the report.
 

Smart Card Reader Market Segment Insights

Dual-interface cards segment held the high market revenue

Based on the product types, the global smart card market is segmented into contact-based card, contactless card, dual interface cards, and hybrid cards. The dual-interface cards segment held the high market revenue and is expected to expand at a high CAGR during the forecasted period. This is attributed to the increasing adoption of dual-interface cards. Dual-interface cards are extensively used as employee ID badges, GSM subscriber identity modules, citizen ID cards, and transit payment cards, owing to their high confidentiality and fast transaction speed. Moreover, they can facilitate both contact and contactless payment transactions leading to their intense demand among customers.

Get Free Sample Report

Microcontroller-based smart card segment held a major market share

On the basis of components, the global smart card reader market is bifurcated into the memory-based smart cards and micro-controller-based smart cards. The microcontroller-based smart card segment held a major market share, accounting for more than 55.24% in 2021, and is expected to reach a high CAGR during the forecast period. The microcontroller-based smart card has an 8-bit microcontroller that aids in performance enhancement and supports contact interfaces.

It is equipped with a VB card OS that supports multiple applications. Additionally, they have vast memory and are portable. The microcontroller-based authentic system has a high growth rate, owing to various advantages. The segment growth is further fueled by the surging adoption of microcontroller smart cards in healthcare services.

Payment transaction segment accounts for a major market share

On the basis of applications, the global card reader market is fragmented into payment transactions, communication, identity management, ticketing, security and access control, and others. The payment transaction segment accounts for a major market share, due to increasing demand for cash alternatives and the availability of affordable credit cards provided by several banks. Additionally, the surging usage of credit cards among consumers while purchasing goods and services augmented the growth of the segment.

Get Free Sample Report

SIM & Telecom segment remained dominant in the global market

On the basis of end-users, the global smart card reader market is divided into SIM & telecom, BFSI, government & health, transportation, retail & gas, and loyalty. The SIM & telecom segment remained dominant, accounting for more than 42% of the global smart card market in 2020. The microcontroller-based smart card, SIM is extensively used in mobile phones and other devices. It contains the subscriber identity module and stores identification information and facilitates communication to wireless network services.

Surging mobile phone users around the world raise the immense demand for SIM smart cards. Additionally, the rapid expansion of the global mobile network and technological advancement in its infrastructure push the growth of the telecom segment. Additionally, the outbreak of the COVID-19 crisis further increases the trend of digitalization of communication, and business with cellular technology. The emergence of high-end SIM card technologies including LTE, M2M,5G, SWP, and eSIM also augmented the market growth.

Asia Pacific is leading the global smart card reader market

In terms of regions, the global smart card reader market is classified as Asia Pacific, North America, Latin America, Europe, and Middle East & Africa. Asia Pacific is leading the global smart card reader market in terms of its growing revenue. The growth of the market in the region is favored by many factors such as the presence of a large number of customers that increases the sales and demand for smart cards for secure financial transactions. The introduction of using smart cards in various banking sectors creates strong market opportunities in the region.

The collaboration and partnership among smart card manufacturing companies and bank administrators to develop various kinds of technology-based smart cards further propel the market growth of the segment. For instance, China Construction Bank, in June 2021 announced its plan to develop a biometric 'hard wallet' smart card that can store digital yuan and authenticate payments for consumers by using the central bank's digital currency with advanced fingerprint authentication and recognition.

Furthermore, the massive presence of major players in the region offers growth prospects for the development and expansion of the global smart card reader market in the region. In addition, Asia Pacific has a high adoption rate of smart cards coupled with extensive demand from healthcare, government, BSFI, retail, and other industries.

Get Free Sample Report