Smartcards will only succeed if they offer multiple applications, according to a new report by market analyst Ovum Inc called Smart Card Systems: Multi-application Technologies and Strategies. Single application cards, Ovum argues, are expensive to produce and deliver little return on the investment to the service provider and minimal value to the consumer.
At the moment only 7% of smartcards and 1% of reading devices are capable of supporting multiple applications, but by 2004, Ovum says, these figures will have risen to 30% and 17% respectively as vendors and service providers recognize the greater business opportunities provided by multiple application systems.
There is, however, still a mental gap to be crossed, says the report. Magnetic stripe cards have encouraged mono-application thinking, which needs to be broken down by proponents of more flexible smartcard technology. The benefits in security are merely the first step, says Ovum, the real potential of multi-function cards is in the creation of a whole a new set of opportunities for card manufacturers and service providers alike, which will require changes in partnerships, distribution and business strategy.
Ovum offers several suggested combinations for future smartcard use, including travel services, commuting and government services. Travelers could use a smartcard for paying for flights, car rental, or hotels from a variety of allied service providers offering cross-support for savings or loyalty schemes to give value to the user. Smartcards in transport schemes might combine speedier ticketing with subsequent savings in administrative costs and more convenient on-board refreshments. Greater security could be the driver behind government payment of benefits, where smartcards, much harder to forge than magnetic stripe technology, will cut the cost of fraud.
