A bustling population of approximately 47.8 million people that is extremely receptive to new technologies has made South Korea one of the leading smart cards markets in the Asia Pacific region. Although there are several avenues for growth, smart card vendors can expect to make maximum impact in the telecommunications, financial, and transportation sectors. In addition to mobile phone SIM cards, combi or multi-application smart cards are fast gaining popularity among the South Koreans. For instance, the multi-application transportation or integrated transit card functions as an e-purse and performs a multitude of minor services such as discount coupons and point accumulation.

This Frost & Sullivan research examines the South Korean smart cards market and provides key market drivers and challenges. The study focuses on trends shaping the market and discusses possible ways of gaining market share. Emerging applications and competitive analysis give participants a clearer perspective of future opportunities.

Quest for Speed and Convenience Drives Demand for Contactless Technology

The increasing need for speed in public transport and convenience in the retail sector has created demand for the contactless smart cards. The contactless cards are also gaining momentum in payment applications due to the convergence between the telecommunications and the banking sector. "Today, there is a visible trend among South Korean banks and telecommunications companies to develop joint smart card projects for mobile banking, e-purse, and loyalty applications," says the analyst.

Competitive Differentiation and Regulatory Pressure to Encourage Migration to Smart Cards

Unlike most countries in the Asia Pacific region, competitive pressures rather than fraud prevalence is driving the decision of South Korean financial institutions to migrate to smart cards. "Credit card companies view the migration to smart cards as a strategic move that allows them to offer differentiated and value-added services for retaining and attracting customers," explains the analyst.

Financial transactions using smart cards are rapidly becoming a reality with the worldwide move towards the Europay, MasterCard, and Visa (EMV) international smart card standard. Despite the challenges posed by such a migration, financial institutions in South Korea are facing increasing pressure from both governmental and regulatory agencies to meet the EMV deadline. With all credit, debit, and ATM cards expected to be chip-based smart cards, South Koreans are looking at a fraud-free financial future.