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Strategic Analysis of the South African Smart Card Markets

Frost & Sullivan
May 2, 2006
83 Pages - SKU: MC1293839

Abstract Table of Contents Related Reports

Countries covered: South Africa

Research Overview

This Frost & Sullivan research service titled Strategic Analysis of the South African Smart Card Markets provides an overview of the growing use of smart cards in South Africa. The study examines market drivers and restraints and details trends anticipated to support market growth in future. An analysis of key sectors and competitors provides the reader with in- depth market information. In this research, Frost & Sullivan's analysts thoroughly examine the banking, telecommunications, government as well as other sectors utilising smart cards.

Market Sectors

Expert Frost & Sullivan analysts thoroughly examine the following market sectors in this research:

By Application:

Telecommunications
Banking
Government
Additional smart card markets

Market Overview

Need for Enhanced Security to Result in Increasing Adoption of Smart Card Systems

The introduction of smart cards by the banking and government sectors is likely to support the development of the smart cards market in South Africa over the next 2-3 years. Currently, the telecommunications sector dominates the overall market due to the high penetration of mobile phones. However, as this sector approaches maturity, the banking and government sectors will exhibit significant growth. Due to consistent losses caused by the high occurrence of fraud, the banking sector is pursuing the adoption of smart card technology, as it offers higher levels of security. As the Europay, MasterCard and Visa (EMV) migration is entering its final phase, its completion is expected to result in the roll out of smart cards in the banking sector in the third quarter of 2006.

At the same time, the South African Government has embarked on a national identification programme that will result in the roll out of about 30 million smart cards over the next five years.

Market Growth to Hinge on Increased Awareness of Smart Card Technology Benefits

Despite the current undertaking of the South African Government to implement the national identification programme, the process has witnessed several delays. Market participants wanting to participate in government sector projects will need to ensure the suitability of their strategy to this particular industry. To this end, most companies have formed divisions that focus solely on government contracts. This assists with planning for and dealing with delays that commonly occur in government projects. Companies will also need to cater to the specific requirements of the government sector and address issues such as Black Economic Empowerment (BEE)."

The lack of standardisation in several sectors is adversely affecting the adoption of smart cards, giving rise to interoperability issues. Hence, market participants will need to invest in addressing interoperability issues to promote market growth. In addition to this they will have to ensure that they undertake effective education and training campaigns to ensure that end-users are fully aware of the benefits and functionalities of smart card technology.

1. Executive Summary
1. Introduction
1. Executive Summary

2. Introduction
        1. An Introduction to the South African Smart Card Market
                1. Introduction
        2. Market Drivers and Restraints
                1. Market Drivers
                a. The Rising Cost of Fraud Prompts Shift to Smart Cards
                b. Completion of EMV Migration Drives Smart Card Growth
                c. HANIS Rollout to Extend Use of Smart Cards
                d. A Lack of Infrastructure Results in High Mobile Phone Penetration
                e. South African Use of Smart Cards Drive the Rest of Africa
                2. Market Restraints
                a. Training and Education Challenges Facing Market Participants
                b. Lack of Standardisation Results in Slower Product Development
                c. Interoperability Issues Slows EMV Migration
        3. Overview
                1. Market Overview
                2. Main Sectors of Smart Card Use

3. Banking Smart Card Market
        1. Introduction to the Banking Sector
                1. Introduction
        2. Market Drivers and Restraints
                1. Market Drivers
                a. Fraud Costs Drive Smart Card Adoption
                b. EMV Migration Nears Completion
                c. EMV Compliancy Allows Introduction of Value-added Services and New Opportunities
                d. Smart Cards Facilitate Penetration of the Unbanked Sector
                e. Pension Payments Promote Smart Card Use
                f. Favourable Experiences in Other Countries Raise Smart Card Demand
                2. Market Restraints
                a. Interoperability Issues Delay EMV Migration
                b. Need for Training and Education Could Limit Smart Card Uptake
                c. Lack of Standards Hamper Rollout of Smart Cards
                d. Insufficient Research and Development Funding Limits Growth
                e. Short-term Technology Investments Threaten Interoperability
                f. Card Ownership Could Limit Opportunities
        3. Overview
                1. Market Overview
                2. Pension Payments Sector
                3. South Africa as a Gateway to Africa

4. Government Smart Card Market
        1. Introduction to the Government Smart Card Market
                1. Introduction
        2. Market Drivers and Restraints
                1. Market Drivers
                a. HANIS Rollout to Spur Growth
                b. Increase in Identity Fraud Pushes Government to Adopt Smart Card Technology
                c. Taxi Recapitalisation Scheme Opens New Markets
                d. National Drivers’ License Initiative to Facilitate Growth
                2. Market Restraints
                a. Delays in Government Projects Slows Smart Card Adoption
                b. Lack of Education Restricts Use of Smart Cards
        3. Overview
                1. Market Overview

5. Telecommunications Smart Card Market
        1. Introduction to the Telecommunications Smart Card Market
                1. Introduction
        2. Market Drivers and Restraints
                1. Market Drivers
                a. Lack of Infrastructure Promotes Widespread Use of Mobile Phones
                b. Mobile Financial Services Increase Demand for SIM Cards
                c. Mobile Entertainment Shows a Promising New Market
                d. Expense of Fixed Line Services Contributes to Consistent High Mobile Phone Use
                e. Relatively High ARPU Levels Maintain Mobile Phone Market
                f. Expansion of 3G Services Leads to Higher Up-take of Mobile Services
                g. Mobile Access to Government Services to Promote Mobile Phone Use
                2. Market Restraints
                a. Market Saturation Limits Growth of Mobile Phone Market
                b. Lack of Awareness Slows Up-take of New Services
        3. Overview
                1. SIM Market Overview
                2. Prepaid Public Phone Cards Overview

6. Additional Sectors for Smart Card Applications in South Africa
        1. Introduction to Additional Smart Card Markets
                1. Introduction
        2. Additional Smart Card Market Sectors
                1. Access Control Sector
                2. Gaming Sector
                3. Television Sector
                4. Transport Sector
                5. Healthcare Sector
                6. Loyalty and Vouchers Sector
                7. Tourism Sector
        3. Concluding Remarks
                1. Conclusion

7. Competitive Analysis
        1. Introduction to South African Competitors
                1. Introduction
        2. Market Participants
                1. Semiconductor Manufacturers
                2. Smart Card Manufacturers
                3. Systems Integrators

8. Conclusions Reached
1. Concluding Remarks
1. Conclusion

List of Figures

Chapter 2

Smart Card Market: Market Drivers Ranked in Order of Impact (South Africa), 2006-2012
Smart Card Market: Market Restraints Ranked in Order of Impact (South Africa), 2006-2012
Smart Card Market: Unit Shipment Forecasts for Main Sectors (South Africa), 2005-2011
Smart Card Market: Revenue Forecasts for Main Sectors (South Africa), 2005-2011

Chapter 3

Banking Smart Card Market: Market Drivers Ranked in Order of Impact (South Africa), 2006-2012
Banking Smart Card Market: Market Restraints Ranked in Order of Impact (South Africa), 2006-2012
Banking Smart Card Market: Unit Shipments and Revenue Forecasts (South Africa), 2005-2011

Chapter 4

Government Smart Card Market: Market Drivers Ranked in Order of Impact (South Africa), 2006-2012
Government Smart Card Market: Market Restraints Ranked in Order of Impact (South Africa), 2006-2012
Government Smart Card Market: Unit Shipments and Revenue Forecasts (South Africa), 2005-2011

Chapter 5

Telecommunications Smart Card Market: Market Drivers Ranked in Order of Impact (South Africa), 2006-2012
Telecommunications Smart Card Market: Market Restraints Ranked in Order of Impact (South Africa), 2006-2012
Telecommunications Smart Card Market: Unit Shipments and Revenue Forecasts (South Africa), 2005-2011

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