Physical security to fuel growth in RFID market

Public sector could drive demand for RFID tags for access control, public transit, shipping security applications
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Wednesday, November 6, 2013

CAMBRIDGE, England—The global RFID market will be worth $23.4 billion in 2020, up from $6.98 billion in 2012, with physical security applications like access control playing a major role in the surge, according to a report from IDTechEx, a technology market research company based here.

Raghu Das, CEO of IDTechEx, estimates that access control cards comprise about 80 percent of RFID applications in the security and financial verticals. “[Access control] is already a very substantial business, and I think it will increase quite considerably as well,” he said. 

The security and financial verticals, worth $2.51 billion of the global RFID market in 2012, are expected to become a $5.21 billion market by 2020, according to the report. Security and financial applications, combined into the same category in the report, will remain the second largest RFID vertical over the projection period.

Access control is a resilient RFID market sector in part due to its diverse applications, Das said. There’s consistently strong demand for RFID readers in hotel cards or at office buildings, where access control cards are often designed to be a “single encompassing system,” Das said, performing an array of functions in addition to granting access.

Besides access control, security applications exist for cargo containers, with the U.S. Department of Defense being a major client, Das said. RFID tags, he noted, help ensure that munitions or other commercial imports on incoming cargo containers are not tampered with.

Besides the convenience factor fueling demand for RFID tags in access control, the more covert security needs of public sector entities also position the market for growth, Das said. “Governments who are trying to make their passports more secure have embedded RFID tags in passports … in 70 countries,” he explained. “That enables new features at certain border points that allow you to get through more quickly.” 

Access control products with RFID tags have growth potential in the public sector because governments don’t want their cards to be vulnerable to counterfeiting, Das said. The U.S. government lags a bit behind the rest of the world in terms of the convergence of RFID and access control, Das added. “There’s a big opportunity in the United States to deploy RFID tags in passports,” he said, noting that the Chinese government embarked on a project of a similar nature in 2003 worth $6 billion.  

The most advanced access control systems, often deployed by governments, rely on constantly evolving RFID technology, Das said. That dynamic tends to make the market active from a research and development perspective. “I think there’s always on ongoing race to stay one step ahead of the counterfeiters, or the people trying to break your security systems, as most [integrated circuits] can be tackled,” he said.

Recently, companies have started to integrate sensors with RFID tags, to determine things like temperature or whether cargo has been tampered with.

Das said that Cubic Corporation, based in San Diego, is exploring the prospect of taking an RFID tag and spraying on top of it a sensor-layer that can “signal whether someone’s come into contact with materials used in explosives.” Das noted that the project is in the research and development phase. 

Factors that could curb growth projections include cost. Some companies may not be interested in investing the capital-intensive projects of installing readers and software, as well as networking and managing the system. “If people don’t have a problem with their existing solution, why go to the expense of putting in a new one?” he said.

The broad array of suppliers could affect pricing. “There are quite a few different systems in place being pushed by different suppliers, and there is perhaps some concern about getting locked into one supplier,” Das said. “In that case, you may not have competitive pricing.”