The dollar value of the plastic card market worldwide rose by only 2% in 2002, as competitive pressure drove down prices and chip cards failed to make inroads into the huge North American market, according to the International Card Manufacturers Association's Fifth Annual Card Manufacturing Global Market Survey.
The dollar value of the market in 2002 was $4.8 billion compared to $4.7 billion in 2001.
The global plastic card market grew by 10% in terms of units shipped in 2002, with 10.7 billion plastic cards manufactured, compared to 9.7 billion cards in 2001, according to the ICMA survey.
The survey covered a variety of plastic cards, including traditional cards with or without a magnetic stripe and the more lucrative chip-based smart cards.
The European region, where chip cards are used widely for transit, telecom and other consumer applications, led the globe in terms of sales volume, with $1.84 billion in 2002, followed by Asia/Pacific with $1.62 billion, North America with $636 million, Latin America with $584 million and Middle East/Africa with $95 million.
Sales volume in the European card market fell to $1.8 billion from $2 billion in 2001, but it was still about three times the size of the North American market in terms of dollars last year. The dollar value of the U.S. card market grew 10% from $577 million in 2001.
Ranked by units manufactured, the North American region was the leader in 2002 with 5.6 billion cards, followed by Europe with 2.3 billion, Asia/Pacific with almost 2 billion, Latin America with 742 million and Middle East/Africa with 153 million.
A rough wholesale price-per-card can be determined by matching costs in North America where the mag-stripe is universal to Europe where chip cards are dominant. Dividing the sales total by the number of cards sold indicates that mag-stripe cards cost 11.4 cents per card in 2002, down slightly from 11.5 cents in 2001. However, the wholesale price of a chip card dropped from 93.5 cents per card in 2001 to 81.2 cents last year, a 13% decline.
"The statistics show that North America is lagging in chip growth. We don't see that changing," says Jeffrey Barnhart, executive director of Princeton Junction, N.J.-based ICMA, a 13-year-old global non-profit association for card manufacturers, personalizers and suppliers.
Still, the greater price for a chip card means that their sales make up 75% of the of dollar value of the global card market even though they account for only 16% of the units shipped. Traditional cards made up 84% of the units shipped but just 25% of the dollar value of the market.
One trend with a future is the rise of gift and loyalty cards, a category that ICMA dubs non-secure cards. "Many consumers are replacing checks and gift certificates with gift cards," says Barnhart.
The number of non-secure cards shipped worldwide rose 13% from 4.0 billion in 2001 to 4.5 billion last year. Sales volume totaled $677 million last year, or a rough wholesale average cost per card of 15 cents. In 2001, the $646 million in sales generated an average of 16.2 cents per card.
The difficulty that the chip market is facing in North America was brought home by two September announcements. Gemplus International SA, one of the world's largest smart card vendors, announced it would shift portions of the production at its Montgomeryville, Pa. plant to mag-stripe cards. Gemplus bought the plant a few years ago with plans to use it for smart card production for clients that include Target Corp.
Schlumberger Ltd., another major smart card manufacturer, announced the renaming of its smart card unit to Axalto in preparation for spinning off the division, selling it, or merging it with another company. Schlumberger said it would decide within a year what it would do with the Paris-based unit, which generated revenues of $750 million last year.
Despite the mixed results for 2002, ICMA predicts an uptick in global card revenues in the coming year due to the rising market share of chip cards in the Asia/Pacific region, and to continued growth in non-secure cards. Also continuing, however, is the shift to lower average unit selling prices, due to industry over-capacity.
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