Well-Defined Business Models and Added-Value Approach are
Key
LONDON, Oct. 23, 2017 /PRNewswire/ -- Payment Cards will
become powered when they take on interactive form factors such as
biometric sensors and Dynamic Code Verification (DCV). In total,
213 million powered payment cards are forecasted to ship in 2022,
according to the latest report by ABI Research, a leader in
emerging technology intelligence. This number is made up of a
combination of DCV cards, biometric sensor cards and other
interactive powered payment card form factors, up from the 260,000
expected to be delivered by the end of 2017. Next-generation
powered payment cards had been in the market periphery for many
years, largely remaining in a dormant phase as vendors continued to
research, develop, and ultimately define and understand the
potential customer base for powered card form factors. Today the
hype has undoubtedly returned to the powered card market, once
dominated by new disruptive startups but reignited by tier one
vendors entering the market fray including Visa, MasterCard,
Gemalto, IDEMIA and FPC, demonstrating a new market belief and
intent.
Today there are pilots aplenty, with a hive of activity in
countries including France,
South Africa, Poland, and Norway. Despite the positivities, cost remains
a significant market barrier, with powered card variants currently
commanding average selling prices (ASPs) up to US$20 per unit, significantly higher than the
traditional payment card which typically commands a US$1 - $2 price point. This has presented a
chicken and egg scenario with significant BOM reductions required
to limit issuance cost impacts to better penetrate the large volume
payment cards opportunity.
Phil Sealy, Principal Analyst at
ABI Research, comments, "Although the payment cards market is
considered the volume holy grail, cost remains one of the major
market barriers because issuers are extremely sensitive to any type
of price increase. This comes at a time when significant pressure
to ASPs is already being felt in the traditional payment cards
market, making a higher value proposition an even harder sell. With
that said, other end markets, which can command higher ASPs, are
presenting a significant opportunity for certain powered payment
card variants. The biometric sensor card for example is more than a
security hardening payments technology, with potential applications
across a multitude of end markets including social/welfare
applications, access control, hospitality, and healthcare."
With price being a major barrier, focus needs to be placed on
business models and added value, likely to prove key
differentiators and ultimately determine powered payment card
success. Today, most issuers are focused on passing on the higher
value card costs onto end users, offering a subscription model in
exchange for a powered payment card and access to the additional
security features. However, it is ABI Research's belief that a
number of business models need formulating from a B2B perspective,
designed to target specific use cases and market sub-segments
including affluent banking customers via a subscription model,
targeted issuance to end users considered most at risk via fraud
profiling and ultimately mass free rollout via a payment as a
service approach.
Sealy Continues; "The ability to offer harden CP and CNP payment
authentication may not be enough of a standalone reason for issuers
to justify investment into next-generation powered payment card
form factors and should be paired with other additional value,
including the ability to increase contactless spending limits,
multi-application enablement or a segue in which an issuer could
look to extend card expiry limits to help spread the higher cost
powered card over a longer period. For the powered payment cards
market, technology and product differentiation will not prove the
only defining market factor and vendors offering a selection of
creative business models, paired with added value within core
offerings will be those which will likely take an early market
lead."
These findings are from ABI Research's Next-generation Powered
Payment Card Technologies analysis report. This report is part of
the company's Digital Security research service, which
includes research, data, and analyst insights.
About ABI Research
ABI Research stands at the forefront of technology market
intelligence, providing business leaders with comprehensive
research and consulting services to help them implement informed,
transformative technology decisions. Founded more than 25 years
ago, the company's global team of senior and long-tenured analysts
delivers deep market data forecasts, analyses, and teardown
services. ABI Research is an industry pioneer, proactively
uncovering ground-breaking business cycles and publishing research
18 to 36 months in advance of other organizations. For more
information, visit www.abiresearch.com.
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