By Steve Owen, vice president of sales and marketing, Identification Business, NXP Semiconductors
Everywhere you look, the impact of the economy has put a major strain on our industry. We are facing many challenges in the drive to grow, or even just maintain, our business models in automatic fare collection, access management, ticketing, e-government, NFC and other contactless technologies.
What can we do in 2009 to overcome these challenges and promote the proliferation of contactless technologies in new areas while demonstrating ROI?
As an industry we must maintain our ability to innovate and gain market insight to address the changes and needs of consumers in the next two to three years. It is our conviction that in 2009 contactless will continue to grow through innovation. This is due in part to its flexibility and its ability to leverage a wide-spread infrastructure that is an integral part of our daily lives from supply-chain systems to transport ticketing.
While certain applications, such as the electronic passport market, show signs of slowing down, expect to see a wide array of new devices and form factors in the contactless arena and growth in other areas such as e-government applications, including electronic ID cards and new forms of payment from your cell phone to your car key.
To succeed, transaction speed and security are the key differentiators in the application space. Security is particularly critical as contactless will see increasing emergence in the payment area as a form of cash replacement.
So what three things do we need to focus on as an industry?
Educate Consumers – We need to help the public embrace the digital devices of tomorrow by educating them and raising awareness surrounding the benefits of contactless technology. We also need to continue to fight to dispel the myths that surround RFID while focusing on the latest trends and security innovations. The industry shares responsibility with authorities and application developers, because while the benefits of contactless payment cards are clear to those who understand the technology, the majority of consumers are unconvinced or unaware of its benefits.
Increased Security Needs – Dealing with security will be the evergreen topic in 2009. It is a moving target and the industry constantly needs to be on guard to make improvements. End-to-end security will also be a hot topic covering every element of the contactless system from electronic ID cards to safeguards against potential vulnerabilities, such as building crypto algorithms that are sustainable for future challenges. Service operators must shift their perspectives to look beyond cost and focus on end-to-end security solutions in contactless systems, involving chip security on cards and readers but also additional security layers. All participants of a smart card project–system integrators, IT suppliers and end users–must commit to providing total system security.
Generating Returns – Once the major hurdles of developing a robust technology and education have been tackled, the business of contactless has one final question to address and it is a big one: how to demonstrate ROI in a spiraling market.
In the case of NFC, it is increasingly important that banks, telecom operators, transit authorities, insurance providers, governments, technology providers and other key stakeholders get their piece of the revenue pie. There are complex regional differences to how this will be played out but there is no question that the need to partner is obvious and that we will see more convergence in the next year.
Already the first indications that mass transit systems may start to use general purpose payment instruments rather than closed payment systems are evident.
Whether in the year 2009 you will be carrying a mobile phone powered by X carrier and sponsored by your local bank is yet to be seen. In addition to the above challenges, the volatility of the current market and credit crunch has put high cost projects on hold and set back time frames.
As carriers and banks struggle to find new revenue models in the coming year, as an industry we need to continue to be innovative, creating flexible and user-friendly applications for contactless technology and prove that these investments will carry us into 2010 and beyond.
About the AVISIAN Publishing Expert Panel
At the close of each year, AVISIAN Publishing’s editorial team selects a group of key leaders from various sectors of the ID technology market to serve as Expert Panelists. Each individual is asked to share their unique insight into what lies ahead. During the month of December, these panelist’s predictions are published daily at the appropriate title within the AVISIAN suite of ID technology publications: SecureIDNews.com, ContactlessNews.com, CR80News.com, RFIDNews.org, FIPS201.com, NFCNews.com, ThirdFactor.com, and DigitalIDNews.com.