With North America Gearing up, Global Chip Card Shipments Crack 1-Billion Mark

With signs that the United States is gearing up to adopt chip cards, a major trade group announced on Monday that worldwide shipments of chip-embedded payment cards topped 1 billion in 2011. North America accounted for some 88 million of the estimated 1.044 billion shipments, according to the Munich-based Smart Payment Association, whose members include six major chip card makers.

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Surpassing the 1-billion mark for the first time represents “a real milestone for the industry,” Brian Russell, an SPA representative, said on Monday at the Cartes North America conference in Las Vegas. Russell is a senior vice president at Giesecke & Devrient, one of the SPA’s members. The other five are AustriaCard, Gemalto, Incard, Oberthur Technologies, and Safran.

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In unveiling the shipment figures, Russell said the SPA members themselves accounted for 898 million cards in 2011, or 86% of total shipments. The SPA estimated the worldwide total based on its member’s numbers and their share of shipments, he said.

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With Canada wrapping up its move to chip cards and the U.S. “finally” showing signs of adopting the technology, the North American market is starting to take on greater prominence as a smart card market, Russell said. He did not present a growth figure for North America alone, but when combined with South America, the Americas region saw a 29% increase in shipments last year among SPA members, exceeding the 26% growth rate for Asia-Pacific and 1% for Europe, the Middle East, and Africa.

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Still, the North American market remains one of the smallest in the world, exceeding only South Asia, which accounted for 87 million total shipments in 2011. Europe, where chip cards began taking root over a decade ago, remains the industry’s largest market, with 367 million cards, followed distantly by South America at 213 million.

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Overall, the SPA’s six member companies enjoyed 12% growth last year, a slowdown from the 18% increase in card shipments they racked up in 2010. Shipments have more than doubled, however, from the 418 million the companies accounted for in 2007, according to the figures released on Monday.

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Of the 898 million chip cards the SPA members shipped, some 15% were contactless cards, up from 13% in 2010 and almost double the percentage in 2007. Contactless capability is seen as a key precursor to mobile payments based on near-field communication technology, which allows smart phone users to pay at the point of sale by using a digital wallet and tapping their handsets on a contactless reader. More than 80% of the contactless chip cards were of the so-called dual-interface variety, meaning they can be used in both contactless and contact terminals.

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Some major U.S. banks and credit unions over the past year or so have begun issuing smart cards, chiefly to customers who travel overseas. At the same time, both Visa Inc. and MasterCard Inc. have released plans that include rules and incentives that are expected to accelerate movement by issuers, processors, and merchants to chip cards. Visa, for example, has mandated that acquirers and merchant processors must be prepared to support chip card transactions by April 2013. It has also set April 2015 as a deadline for a shift of liability for counterfeit-fraud losses to acquirers, and by extension to merchants, in cases where merchants have not installed chip card readers.