Card vendors seek higher margins with biometrics as India and U.S. adopt contactless payments
Embedded biometric technology is one of the key next-generation form factors for payment cards vendors are focused on to stop the market’s declining ASP (average selling price), according to ABI Research. The number of EMV payment cards issued is forecast to grow from 3.18 billion in 2019 to more than 3.75 billion in 2023, according to the market advisory firm.
New banking clients, increased wealth in developing areas, and contactless migration are driving growth, but vendors are seeking higher value cards, such as those made of metal or integrating biometric authentication, to boost per-unit revenues.
Overall contactless growth stalled in 2017 and 2018, as migration to the new cards stalled in China. Other markets could drive growth in contactless cards in 2019, however. Contactless cards are growing significantly in the Indian market, where the Reserve Bank of India has released tokenization guidelines, and the Finance Ministry has pushed contactless cards. Nearly 10 percent of cards issued in India in Q4 2018 were contactless, according to ABI estimates. In the U.S., the “Chase effect” is creating momentum in contactless cards, as other issuers follow Chase’s lead. ABI estimates that the number of contactless cards issued in India and the U.S. will increase from 200 million in 2019 to 609 million in 2023.
“Despite the positivity’s of ongoing migration to contactless cards, continued ASP degradation in the traditional market is hitting vendor bottom lines. This is causing a shift in strategy toward the development of higher-value propositions to help counter reducing margins,” explains ABI Research’s Research Director Phil Sealy.
The firm notes that Gemalto, IDEMIA, G+D, CompoSecure, Fingerprint Cards, IDEX, Kona, Linxens, NXP, Infineon, STMicro, Precise Biometrics, and Next Biometrics already have products in place to address the market for higher-value cards, and says the reported first volume shipment of fingerprint sensors for dual-interface cards by Fingerprint Cards earlier this year supports forecasted growth in biometric smart cards.
The findings are from ABI Research’s recently released Payment & Banking Card Technologies report and its Payment & Banking Card Secure IC Technologies report. ABI recently predicted the growth of biometric payment cards will take off in 2021.