Betting the future on smart cards

Plastic money is not new in India anymore. We have over 50 million cards in India. And they come with a bewildering variety of features and facilities. So as your money turns more and more into plastic (and silicon), it makes sense to ask: “How can I become a smart card-user?”

There are a million ways you can do this. What's equally significant is how most of us are soon going to become smart-card users.

At their simplest, smart cards have embedded chips that can securely store more and richer information than the simple magnetic swipe cards (that are widely used as debit or credit cards). They offer superior reliability and safety. Not surprisingly, the earliest adopters of smart cards have been GSM telephone networks—smart cards are easily deployed as SIM cards—to identify and authenticate genuine users on the telephone network.

Yes, there are business opportunities too. A few days back I met Sudhir Rao, MD and CEO of Bartronics India. They are putting in about four times their current invested capital to set up India’s first smart card manufacturing facility near Hyderabad. Capacity: 80 million cards per annum.

Why are companies like Bartronics betting their future on smart cards? It’s got to do with the incremental productivity, convenience and safety that these devices can usher into our lives. It’s also got to do with the government driving the need for having a national citizen identity card. If this initiative alone comes through, we are looking at a market for a billion-plus cards with a plethora of applications.

Smart-card usage can span a mind boggling array of applications: credit or debit cards, ID cards, health cards, driving licences, loyalty cards, social security cards, pension cards, and so on. What’s even more interesting is that “contact” or swiping may not be necessary for some cards, meaning that you could walk through a toll way (or toilet) and get billed for using it.

Combined with automatic identification and data collection technologies such as bar codes, radio frequency identification devices, biometrics and electronic article surveillance systems, smart cards can deliver speed, accuracy and new capabilities that can change our lives in many ways.

As a potential user of smart cards, I can already sense the bewildering variety of applications for these cards. My central identity would therefore be the root, or gateway, to all my other services and applications such as bank and demat accounts, PAN number, credit card accounts, mobile phone number, insurance policies, driving licence, electricity and gas connections, health and crime records, passport, etc. Some of these such as mobiles or passports might perforce require a dedicated smart card, but that would be an exception rather than a norm. I would finally be a smart smart-card user!

(By Dipen Sheth, Head of Research, Wealth Management Advisory Services)