Smart payment card unit shipments are forecast to grow from an estimated 2.5 billion in 2015 to almost 3.4 billion in 2020, despite an increase in mobile and wearable payment products. The United States and China are projected to continue to be the key markets globally that will drive the growth of Europay, MasterCard and Visa (EMV) card shipments over the next five years.
In the U.S., shipments of smart payment and banking cards are projected to grow strongly, from 223.2 million in 2014 to 644.2 million in 2015. The initial growth for EMV cards will come from tier-1 banks, but growth from tier-2 and tier-3 banks is projected to ramp up, as well.
Shipments of smart payment and banking cards to the U.S. in 2016 are projected to decline slightly to 624.7 million, primarily because large issuers and processors overstocked in 2015. This card glut is projected to have a negative impact on the card demand and sales growth in 2016. Small and medium-sized issuers have been slower to transition to chip-based cards.
China is more advanced when it comes to EMV card migration than the United States. The number of smart payment cards shipped in 2015 was nearly 600 million. It is important to note that only “pure” payment cards are looked at in these totals; the Chinese social security card, Chinese transport card and Chinese health card with a payment function and co-branded cards are excluded.
During the initial years of China’s EMV migration, volume growth was mainly driven by tier-1 banks. After this initial period, tier-2 and tier-3 banks began introducing EMV cards, which increased shipment volume. During the next five years, the growth profile of EMV cards in China is projected to slow, reflecting the fact that the Chinese market will shift from an EMV migration market to a replacement market.
Other countries leading growth
Other countries projected to achieve positive growth in the next five years include the following:
In February 2016, India’s Union Cabinet approved the withdrawal of surcharges, service charges and convenience fees on card and digital payments. This announcement is instrumental in reducing tax avoidance, migration of government payments and collections to cashless mode. The move primarily discourages transactions in cash, by providing access to financial payment services to citizens, so they can pay using cards and digital means, thus shifting the payment ecosystem from cash-dominated to non-cash or less-cash payments.
The Indian market for smart payment and banking cards began its ascent in the second half of 2015, and by the end of the year an estimated 30 million smart payment cards were shipped. In 2016, 92.9 million shipments are projected. Although the growth profile and volume shipments in India will not be as large as countries like China and the US, it will represent good market potential for smart card suppliers.
There has been a thawing in international relations between Iran and the rest of the world, which has led to more optimism about the potential of Iran migrating to EMV cards. The Central Bank of Iran’s Payment Systems’ Department announced in February that Japan’s JCB credit cards will be introduced to Iranian customers by September of this year, and in April Visa and MasterCard were in negotiations with the Central Bank of Iran to get their payment cards into the Iranian market. These announcements are projected to have a positive impact on the smart payment cards market over the next few years.
Despite the hype around mobile payments and wearable payments, the smart payment card is still in excellent health – displaying good growth potential over the next five years.