Shipments of smart cards in China will exceed 1 billion by 2016, helping China catch up to Europe, Japan and other countries that have begun to transition to smart cards to improve security, according to a recently released report by IMS Research Ltd.
Today, fewer than 2% of the cards in China are smart cards or EMV cards, but that will change soon because of new government policies, Alex Green, an analyst at Wellingborough, UK-based IMS Research, tells PaymentsSource.
In March, the People’s Bank of China, the country's central bank, announced that all financial institutions domestically must be prepared to convert to issuing smart cards by Jan. 1, 2013. “And, by 2015, all new cards issued have to be based on smart cards,” Green says.
As of the end of 2010, Chinese issuers had about 2.4 billion payment cards in circulation, almost all of which are magnetic stripe cards–and mostly debit cards. By 2016, issuers will have reissued more than half of those cards as smart cards, Green says.
According to the March announcement, the migration to smart cards will improve security, allow for greater innovation and increase compatibility with international payments systems.
China is far behind other countries in smart card adoption. In Europe, for example, adoption rates vary from one-third of all cards in Spain to all cards in the United Kingdom In the U.S., about 20% of cards are smart cards, typically contactless cards used for micropayments, Green says.
“Asia is less-uniform than Europe,” says Green. “In Japan, it’s a similar point to what’s seen in Europe. But India has a very small smart card penetration, and it’s not forecast to be anywhere near the rollout that’s projected for China.”
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