Market shows signs of growth

The market for smart cards in the United States remains small, although the technology is popular in Europe as an alternative to magnetic stripe bank cards and ordinary identification cards.

"The U.S. government is probably the largest market for smart cards in the U.S.," said Charles Kolodgy, research manager for Internet security at IDC, Framingham, Mass.

"In the short term, we don't see that much growth because the infrastructure isn't there for the [smart card] readers," he said. Sales in 1999 totaled $41 million for smart cards and readers used for identification and authentication, and IDC's estimate for 2000 is $47 million, Kolodgy said. The company predicts annual sales growth of 33 percent. In Europe, by contrast, the smart card market grew by 44 percent last year, according to IDC.

One reason smart cards have been popular in Europe is that there is little political resistance to the notion of national identification cards, Kolodgy said. In the United States, there would be a great deal of opposition to federal or state government-issued ID cards, he said.

"That is why the federal government is leading smart card use for identification cards in the U.S.," he said. "The privacy concern with the military isn't the issue it is with civilians."