With several smart card-based transit projects developing around the globe, shipments of smart cards supporting transit applications will grow at an 11% compound annual rate through 2015, new research suggests.

The Warsaw, Poland office of market-research firm Frost & Sullivan International conducted the research earlier this year by analyzing shipment data from card manufacturers.

Current and developing transit programs around the globe and new developments in technology are driving the growth in demand for transit-based smart cards, Yiru Zhong, an analyst with Frost & Sullivan’s information and communication technologies group, tells PaymentsSource.

“In terms of demand, there are a lot of cities either developing new transit systems or improving existing systems,” Zhong says. In several cities, the local government wants an overhaul of existing transit systems to not only simplify the systems but to reduce their carbon footprint as well, she adds.

Moreover, in some cities, commuters need to use different cards for each mode of transportation, Zhong explains. Implementing a smart card-based system helps eliminate this duplication and make commuting simpler, she says.

The use of smart cards has matured in Europe, and larger cities such as Shanghai are now considered “hot spots for future smart card-based transit projects,” Zhong says.

Additionally, the emergence of alternative transportation payment methods has started to lay the groundwork for greater adoption of smart cards with multiple applications, according to Frost & Sullivan’s research. Many cities globally have contact or contactless transportation payment systems or have plans to develop one, the company noted.

In the United States, for example, the Chicago Transit Authority, which already operates a contactless ticketing system, recently announced plans for a fare-collection system that would enable consumers to use their mobile phones to pay for fares (see story).

Moreover, countries such as Japan, Dubai and India also are planning or have launched contactless payment transit programs (see story).

The number of commuters holding a transit smart card will begin to increase by yearend, Frost & Sullivan’s research suggests. As such, the company believes the smart card industry should explore the opportunities to help cities become “smart cities,” which connect by automating and updating payment systems and enable consumers to use one card to pay for almost everything, Zhong says.

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