Abstract
Security Features of Magnetic Stripe Card Systems Require Upgrades
The migration from magnetic stripe to chip cards is not likely to be complete
for at least seven to eight years. Hence, it is important to address security
concerns of magnetic stripe systems despite Europay, MasterCard, and Visa (EMV)
specifications to equip card terminals to be smart card-compatible. Although
technologies such as high coercivity and Magneprint address 'card skimming' and
counterfeiting issues effectively, they do not solve the problem for existing
cards. This could be overcome by building the security component into the reader
instead of placing it in the card, as it is more feasible to upgrade readers
across applications.
This Frost & Sullivan research examines the World Card Reader Markets. It
offers revenue forecasts by market segments and covers key drivers and
restraints affecting market growth. This research analyzes three prominent
reader technologies - magnetic stripe, smart card, and hybrid (magnetic stripe
and smart card).
National ID Projects to Spur Growth in Readers Market
Reacting to the increasing global security concerns, National ID projects
have been initiated by governments of many countries. Malaysia, Hong Kong, and
Finland are some of the pioneers. Apart from driving the sales of readers
directly, such projects also enhance the confidence of the market about the
ability of card systems to be a highly credible means of digital identification.
MyKad, the Malaysian citizen card project, aims to design a single
microprocessor-based smart card that contains the citizen's identification,
driving license, passport, health information, and e-cash among others.
Such multi-application projects will provide utility as well as value
additions to end users and considerable return on investment for card issuers.
For instance, the MyKad project is expected to have more than 14 million users,
aiding the deployment of more than 20,000 card readers between 2003 and 2005.
Global adoption of the national ID system will also help achieve universal
interoperability between similar systems. "If a standards mechanism could
be evolved for such national ID projects worldwide, it would be possible to
achieve global interoperability between such systems, which will be very useful
in today's security scenario," states the analyst.
EMV Migrations and More Banking Terminals to Boost Market Revenues
Despite falling prices and decreasing profit margins, the magnetic stripe and
smart card reader market is expected to continue to grow. EMV migrations and
greater numbers of banking terminals in developing countries will fuel an
increase in revenue. EMV migration rate is exceptional in Europe as it has the
highest incidence of credit card fraud. Moreover, its consumers are familiar
with smart cards since it has been a very early adopter of the technology.
Several countries, particularly Europe, are already in the implementation phase
of EMV migration.
Another growing card application area is home banking, which has a steadily
increasing customer base in the United Kingdom, France, and Germany.
"Although many of such systems use only a PIN-based authentication
currently, banks are fast migrating to card-based authentication, especially due
to the growing concerns over Internet security," notes the analyst.
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