STMicroelectronics is accelerating the time-to-market of smart payment solutions in the banking side and mobile transactions.
The smart card market is forecast to reach $16.9 billion by 2026, up from $13.9 billion in 2021—registering a compound annual growth rate (CAGR) of 4% during the period, according to MarketsandMarket. This is mainly driven by the surge in demand for contactless card payments, proliferation of smart cards in healthcare and transportation, and increased penetration of smart cards in access control and personal identification applications, to name a few.
Indeed, payment cards are essential for everyday life and business. According to the Smart Payment Association (SPA), around 90% of non-cash consumer payments are made using cards in physical stores—in fact, payment cards are also critical for accessing cash. Moreover, SPA noted that 40-60% of online payments are supported directly or indirectly by payment cards.
Leading the industry in providing technology solutions for the smart card industry is STMicroelectronics. Over the past 30 years, the company has contributed to the development of the smart card technology and industry.
“We support all of the applications we are using today, including banking cards, SIM cards, transport cards, eID cards, passports, conditional access for pay-TV, and providing authentication solution in laptops,” says Jerome Juvin, Head of Marketing and Application for Secure Microcontroller, Greater China South Asia & Korea, at STMicroelectronics. “We also provide embedded system solutions such as NFC, embedded secure element, and eSIM, which go into smart devices such as mobile phones and wearables.”
In fact, ST’s Secure Microcontroller Division (SMD) is among the top three in this industry, having shipped over 14 billion secure MCUs worldwide today.
During an online briefing, Juvin highlights how the company is helping accelerate the time-to-integration—and therefore, time-to-market—of smart payment solutions in the banking side and mobile transactions.
There is a massive migration to dual interface (chip and wireless) banking cards, mainly driven by the security and user convenience, as well as the push by Visa, MasterCard, and China Union Pay (CUP).
In 2020, a total of 2.5 billion units of smart payment cards and modules were shipped, according to data from SPA Members and the Market Monitoring Advisory Council Members. This was achieved despite an observed decrease in demand from China, India, and Latin American countries due to extended national lockdowns in response to COVID-19 pandemic.
“We expect it to recover after the pandemic, mainly driven by dual interface deployment worldwide, and innovations coming from banks, new form factors for the banking cards—whether metal, transparent, ecological, and moving forward, biometric, which is also being piloted at various places,” says Juvin.
He notes that Asia represents a significant market for banking cards, accounting for roughly 40% of the worldwide TAM, especially with the migration from contact to dual interface in all countries in the region.
“What is specific about Asia is that although the traditional payment schemes like Visa, MasterCard, AMEX, Discovery, and JCB are being used, most of the countries are also operating local payment schemes,” he says. “In Southeast Asia, due to the fragmentation of the market and the number of countries, we can see a large number of domestic schemes, which needs to be taken into account in order to support this market.”
ST is in a strong position in Asia’s smart card market. For payment, the company has already shipped more than 5 billion smart card ICs. “We are growing well, especially following the introduction of our latest product ST31P, the 40nm technology dual interface that is being used now by a large number of customers,” says Juvin.
The company’s offering is based on three pillars—the ST31 hardware platform, the STPay-Topaz, and the STPay-Topaz-Bio, which leverages the STM32 MCU to bring an optimized solution in terms of BOM, power, and performance to help develop the most cost-effective solution for the market.
“We are using advanced technology to develop a very small die solution on 12-inch wafers, allowing us to produce cost-competitive solutions, which is very important, especially in the Asian market,” says Juvin. “We also developed an optimized RF, MCU, and embedded flash system in order to enable very fast transaction, which is especially important in order to get great user experience when the customer is tapping the card in front of the reader.”
The introduction of NFC and the secure element to mobile devices has been quite disruptive, creating a lot of opportunities for the ecosystem, mobile network operators, mobile device manufacturers, technology providers, fintech and application developers.
“There is a great acceleration here in terms of acceptance of new technologies and new ways to pay, which also creates a great opportunity for ST,” says Juvin. “First of all, it brings an addressable market of 1.3 billion units of smartphones and wearables. Most of them will be attached to NFC technology.” He says almost 90% of the high-end smartphones worldwide are attached with NFC technology, while roughly 55% of the conventional smartphones feature NFC and secure element technologies.
And there’s no sign of stopping. In China, a lot of mid-end smartphone models are coming with NFC, mainly driven by OEM pay like HuaweiPay, OPPOPay and XiaomiPay, especially in transit applications. This is on top of the over 125 cities that are already accepting wallet pay for transportation.
He notes that Chinese phone manufacturers are reaching a certain level of maturity and penetration rate in China. “They are looking to grow their market share outside of China, and we have already seen their presence in Europe. This is what ST is preparing for, especially with the introduction of STPay-Mobile,” Juvin says.
Overall, Asia represents 50% of worldwide TAM for smartphones, with China, Japan, and South Korea leading in NFC and contactless technology deployments. Focusing on China, ST’s ST54 platform—a single die integrated with NFC, together with a microcontroller and a secure element, plus the JavaCard OS—is now deployed at the majority of Chinese OEMs.
Launched during the Mobile World Congress in Shanghai in February, STPay-Mobile was developed to provide payment, transport, and access control services. It is the second pillar of ST’s mobile payment offering.
STPay-Mobile, basically a cloud-based platform provided through a partnership with Chinese company SNOWBALL, connects the transit transport operators to the mobile device manufacturers, and enables faster development, test, and integration. SNOWBALL provides all the lifecycle management of transit applications such as installation, top-up, transaction, refund, backup, and restore—bringing ease to service providers, device manufacturers, and technology integrators.
After transit applications, ST is now preparing for the launch of STPay-Mobile for payment. “In the same way, we will connect banks, focusing first on Visa and MasterCard payment schemes, to a cloud-based platform, with the solution pre-validated to ST54,” says Juvin. “Again, with the objective to improve time to development, time to integration, and therefore, time to market.”
ST’s Key Differentiator
One of the key factors to accelerate the adoption of any technology in any existing infrastructure is the ease of implementation and integration. And this is the great differentiator of ST’s solutions—the significant reduction in potential interoperability issues with existing infrastructure and systems. This is more evident in some parts of Asia where local solutions proliferate—take for example Singapore and Hong Kong, where EZ-Link and Octopus, respectively, are very well established.
“This is definitely an opportunity,” says Juvin. “Hong Kong has already made the steps to go beyond contactless cards. They are now ready to accept smart phones to for the Hong Kong transportation scheme. For EZ-Link in Singapore, I believe they are not so far. We have taken the steps for mobile phones, but this is definitely an opportunity—this is exactly what ST would like to address with STPay-Mobile offering. The great value proposition and benefit of STPay-Mobile is that there is no need to change existing infrastructure.
“The technology we propose both on ST54 and STPay-Mobile hub is an easy way to be integrated in such infrastructure. Early this year, there was a press announcement for the city of Dubai, which is now accepting NFC smart phones on top of the existing contactless card. The great benefit for Dubai is that they could reuse the infrastructure already in place. Back to EZ-Link, for instance, they are the ones who will trigger the motivation. Once the motivation is there, the STPay-Mobile platform would be a good fit to digitalize contactless cards on mobile devices.”