Smart Card Technology Gains in Importance in Access Control -- All Set for a Promising Future.

PALO ALTO, Calif. -- The advent of contactless personal computer/smart card (PC/SC) reader technology marks a significant development for the smart card market in general and the access control segment in particular. Manufacturers are increasingly launching PC readers with contactless functionality.

New analysis from Frost & Sullivan (www.smartcards.frost.com), World Smart Card Readers & Terminals Markets, reveals that the total smart card reader market totaled 9.4 million units in 2003 and projects to reach 35.5 million units in 2008. The total smart card terminals market totaled 4.8 million units in 2003 and projects to reach 14.3 million units in 2008.

If you are interested in a virtual brochure, which provides manufacturers, end-users and other industry participants an overview of the latest analysis of the World Smart Card Readers & Terminals Markets, send an e-mail to Natalie - Corporate Communications at [e-mail] with the following information: your full name, company name, title, telephone number, fax number, and e-mail. Upon receipt of the above information, an overview will be sent to you via e-mail.

Bureaucratic delays that are often associated with large government projects such as national ID, driving license, or health cards are likely to adversely affect the market for smart card readers.

"Lack of government proactiveness is delaying potential roll-outs of national ID project," notes Frost & Sullivan Research Analyst Karthik Nagarajan. "In spite of successful pilots in many Asian and European countries, governments are delaying their decision for actual roll-outs, mainly due to bureaucracy and cost apprehension."

Potential changes in government also bring in the added threat of delaying proposed projects for political reasons. This trend is particularly evident in some of the developing Asian nations.

Card issuers are also challenged by the need for a standardized technology for government projects. Following the International Civil Aviation Organization's (ICAO) recommendations to move toward smart card-enabled e-passports, several countries, including the United States, are testing various technologies for compatibility with ICAO's specifications.

Once launched, this is likely to be the largest smart card project in the United States and will involve embedding contact-less chips into passports that reader terminals will access at the airport.

The tests conducted are not without their share of difficulties. Recent tests faced problems due to government regulations on encryption.

Since the project is currently in a phase where interoperability is being evaluated, these problems are likely to be overcome. However, the standardization requirement -- owing to the critical nature of such projects -- will continue to pose a strong challenge to manufacturers and government agencies alike.

In the banking segment, terminal manufacturers face the task of creating a convincing business case for smart card payments. Especially the case of North America where the advantages of chip cards are not as attractive as they are in Europe and Asia.

"Though contactless payment has gained popularity in North America, it is far from being a significant driver for large-scale migration of banking cards," remarks Nagarajan. "Hence, finding an alternative and more compelling value proposition for consumers continues to be an important challenge for the terminals market."

Despite these challenges, the smart card readers and terminals market is expected to benefit from Europay, MasterCard, Visa (EMV) migrations in the banking sector across the world. Looming EMV deadlines ranging from early 2005 up to 2006 for various countries will present significant opportunities for the readers/terminals market and help it achieve strong growth.

World Smart Card Readers & Terminals Markets, part of the Global Smart Card Subscription, evaluates the potential of the smart card readers and terminals market on a global level. The study provides in-depth regional analysis that helps to identify growth opportunities in the four major geographical markets -- North America, Latin America, Europe, Middle East, and Africa (EMEA), and the Asia Pacific region. Executive summaries and interviews are available to the press.

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World Smart Card Readers & Terminals Markets

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Keywords in this release: smart cards, access control, PC/SC reader technology, PC readers, International Civil Aviation Organization, ICAO, contactless chips, contactless payment, Europay, MasterCard, Visa, EMV, readers, terminals, point-of-sale, smart card reader chipsets.