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Rapid adoption of contactless payment

It is considered good taste for Europeans to smile knowingly when deployment of
smart card applications in the United States is mentioned. It is a hackneyed topic
which invariably comes down to the “Not Invented Here” syndrome. This
simplistic vision is very outdated. American banks have certainly not yet clearly
indicated that they will one day adopt the EMV chip, but they are the first in the
world to have adopted, two or three years ago, contactless payment using a chip
capable of emulating the magnetic strip of their traditional bank cards.

The American market is the biggest market in the world for payment cards, in
particular credit payment. It captured more than 56% of payment transactions
carried out in 2007, representing $40.7bn. The share in this of contactless cards
was still modest in 2006, representing just 777 million transactions (27 million
cards). However, forecasts predict significant growth by 2011: 2.2 million
transactions and 109 million cards.

This market is encouraged by the ease of use and speed offered by contactless,
for the consumer as well as businesses. For this reason, JP Morgan has already
issued more than 10 million “Blink” cards and Washington Mutual Inc. has
recently announced the issue of 25 million cards. All the big banks such as Wells
Fargo & Co., HSBC Holdings PLC, Citigroup Inc. have contactless card
programmes. Bank of America, Citi Cards, SunTrust, Wachovia and
BancorSouth have also launched online banking applications using mobile
phones as a result of agreements with operators such as Verizon and AT&T
Wireless, secure software publishing companies such as Firethorn and
mFoundry, and big “processors“ such as First Data and Metavante. The forecast
is that 34 million mobile phones will be used by online banking applications in
2012. And 8-30 million phones will be equipped with an NFC interface, for
contactless proximity payment applications1.
Use of cards in governmental security applications
Creators of the Common Access Card (CAC)
In the field of governmental and federal security, the United States was the first
country in the world to involve experts (some of whom were recruited by the
pioneers of smart cards in Europe). These ran a national “smartcard” programme
within the NIST (National Institute of Standards and Technology) and the GSA
(General Services Administration). This programme made it possible to set the
specifications and proceed, from 2000, with the deployment of a smart card (the
CAC, meaning Common Access Card) now used in all sensitive administrations
of the DoD (Department of Defense). More recently, this programme also made it
possible to develop a smart federal identity card incorporating biometric data, the
PIV (Personal Identity Verification).
Increase in the number of CAC cards
Since their launch in 2000, 13 million CAC cards have been issued. These cards
make it possible to control access to the workstations of DoD employees,
evaluate emails and access websites. A new generation was released in 2006, in
compliance with the 2004 directive known as HSPD-12 (Homeland Security
Presidential Directive), from which the PIV card originated. These two cards now
offer contactless functions to control access to federal buildings and benefit from
public key infrastructure (PKI) for deployment and use. They may also use
biometric data to authenticate carriers at their workstation. Several tens of
millions of PIV cards are due to be deployed in due course.
An ambitious American identity card project
The most ambitious programme, but also the most controversial, is that of
creating a national identity card issued by each State to replace the driving
licences, currently used as identity cards by the authorities and which can easily
be forged. The “Real ID Act”, signed in May 2005 by President Bush, is far from
universally popular however. Its cost of around $15bn, the expected time it will
take to implement, the risk to the protection of privacy and confusion over the technologies to be implemented are all currently obstacles to its implementation.

Once again, smart card technologies are part of the debate. Less than a month
ago, the NIST confirmed, after a series of tests, that the use of biometric data
combined with smart card technologies (or “match-on-card“, whereby all
calculations are carried out in the chip) offered a higher level of security than any
other solutions. This could be a solution to the "privacy" and security questions
still posed by the Real ID Act.
So, with the two major advances represented by contactless payment and
access control for governmental applications, the smart card has won over the
United States in less than 10 years.

From November 4 to 6, 2008, the United States will be the guest of honour
at CARTES & IDentification 2008.

1 Source: Visa Inc, MasterCard, ICMA and MarketsResearch.com, In-Stat

About Cartes & IDentification 2008

The Cartes & IDentification Trade show will open its doors on November 4th at Paris-
Nord Villepinte Exhibition Centre. The world leading event on digital security and smart
technologies will bring together all the international players of the sector who will present
their innovations to the 20,000 expected visitors. For this 2008 edition, the Unites States
will be the guest of honor.