RFID market to hit $1.6 billion by 2011

No surprises here, we think. According to Palo Alto, California-based research firm Frost & Sullivan, the contactless smart card market is booming due to demand from the ePassport and micro-payment segments (such as for gasoline and other quick purchases that are handled with a quick wave of an RF-enabled key fob.) “The ePassport segment made big strides as interoperability efforts intensified, impelled by a heightened sense of urgency for more secure and sophisticated travel documents,” said analyst Michelle Foong. “The payment market also saw increased uptake as users across more developed markets warmed up to the idea of contactless payments.” All in all, Frost & Sullivan reported that the market earned revenues of $408.9 million in 2005, and estimates this to reach $1.6 billion in 2011.

The report does mention one potential hiccup, however: the failure of consumers (and some journalists, including ourselves) to properly distinguish between radio frequency identification (RFID) tags and contactless (RF) smart card when considering privacy implications. The former, readers know, is mainly used for less secure transactions such as supply chain management, while the latter transmit over much shorter distances and are made to be more secure (although even that claim is controversial.) “This confusion highlights the urgent need for market participants and end users to crystallize their understanding of the two different technologies at work here,” said Foong. “This understanding is critical for tapping the full potential of the contactless smart cards market.”