“Even as smart card manufacturers remain wary of rival technologies, the ability of smart cards to host multiple applications is expected to give them an edge over other technologies,” says Frost & Sullivan Research Analyst Karthik Nagarajan.

Capable of balancing initial costs with the highest security architecture, smart cards provide a proven cost-effective solution. Further, they can be integrated with competing technologies to derive maximum benefit as they are highly flexible and can be easily modified and upgraded to complement other systems.
For instance, though USB is a potentially rival technology, USB dongles using embedded smart cards in SIM format increase overall efficiency. These USB tokens use a smart card-based network login system that eliminates the need for an actual card reader. The device can be plugged into a computer’s standard USB port to authenticate users and digitally sign sensitive business transactions.
In combination with a SIM-based card, USB can be used in virtual private network (VPN) and in gaining corporate ID access to a computer network. Manufacturers are also considering the idea of merging USB dongles with contactless technology to provide both physical and logical access control.

According to Frost & Sullivan, this doesn’t necessarily apply in the physical access control industry. Not all users require the multi-application advantage of smart cards. It makes better business sense for them to opt for a single-purpose card. For instance, proximity cards are relatively cheaper than contactless cards for physical access control. Therefore, as a short-term investment for basic physical security access, organizations prefer this technology.

“Managing existing identifications systems alone is a huge expense for many companies,” says Frost & Sullivan Research Analyst Jafizwaty Haji Ishahak. “Moreover, in a card-based electronic access control system, cards need to be replaced or re-issued for various reasons, and this further increases the expenses incurred.”

Analysts also say the process of implementing a smart card system is also rather cumbersome, as it requires card issuance and personalization overheads. Though the price of readers has decreased for logical access control, a company needs to purchase smart cards and provide or integrate their PCs with readers. It is also essential that the company have a card management system to manage the card issuance and revocation.

Further, many corporations prefer storing digital certificates and private keys on the hard drives rather than incurring the expenditure of installing readers and issuing smart cards.

“Smart cards are well positioned to keep pace with changing end-user demands as they are easily compatible with other systems,” notes Ishahak. “Manufacturers should try to take advantage of smart cards’ superior efficiency and incorporate them with other emerging technologies to maximize profits.”