Frost: Confusion Between RFID, Contactless Smart Cards Causing Concern

July 31, 2007 // Published as a news service by IHS

According to Frost & Sullivan, the market still lacks a clear understanding of what smart card technology is able to do in terms of security and processing.

Analysts said there is a need to crystallize the market's understanding of the differences between RFID and contactless smart cards so that better informed decisions can be made and suitable applications be employed for each technology.

This will also help boost the growth of the two technologies.

"RFID, as well as contactless smart cards are seeing healthy growth levels in the Asia-Pacific region," said Frost & Sullivan industry analyst Michelle Foong.

"New applications continue to emerge and prices of devices, such as cards, tags and readers, are falling as the market matures in some of the key applications."

Notwithstanding the numerous benefits of RFID and contactless smart cards, analysts said there remains considerable confusion about the similarities and differences between the two technologies. This, in turn, is leading to user anxiety and concerns over the security and privacy issues when used for personal documents and confidential transactions.

The convenience, speed and efficiency provided by contactless technology in RFID and contactless smart cards are far superior to the capabilities of older technologies, such as bar codes, magnetic stripes and paper-based tickets.

Analysts said contactless cards, in particular, are capable of transacting more sensitive and confidential information than RFID cards/tags, as they are usually equipped with higher authentication mechanisms and security layers. It should not be confused with RFID technology, however, which is more popular in instances where less confidential data are transacted and a single application is used.

Smart cards have become popular in a several key applications, such as mass transit, government transactions, banking and access control. Analysts said RFID, on the other hand, is more popular for tracking items and goods, like supply chain and logistics management.

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"Confusion between the two technologies could eventually impede the potential growth of both the RFID and contactless smart cards markets," said Foong. "Hence, it is imperative that market participants work toward increasing market awareness of both their capabilities and features so that users are able to make better-informed decisions when selecting the type of technology to be used for specific applications."

Source: Frost & Sullivan.