The global market for contactless smart cards is estimated to reach $1.6 billion in 2011, up from $409 million in 2005, according to Frost & Sullivan.

Security has invigorated the sluggish smart card market. The cards have been used as campus IDs for years, but passports and national IDs are much larger applications.

"The e-passport segment made big strides as interoperability efforts intensified," said Michelle Foong of Frost, "impelled by a heightened sense of urgency for more secure and sophisticated travel documents."

Smart card use is also growing as a payment method, especially in microtransactions.

Privacy and security concerns have dogged smart cards since their development, and have been heightened with the rise of radio frequency identification (RFID). RFID chips are usually not as secure as smart cards, and since RFID technology is contactless, some people confuse them with contactless smart cards. Ms. Foong said that educating users about the differences between the two technologies is important to promote adoption. 

Via eMarketer