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Smart Card Overview

Smart cards are used by millions of cardholders worldwide and are at work processing point-of-sale transactions, managing records, protecting computers, and securing facilities. With the latest data breaches, smart card technology is becoming more important than ever. It is also a great technology to increase the security of the Internet of Things (IoT) on it way to the Internet of Trusted Things (IoT2).

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Smart Card Evolution

Information technology is evolving at an amazing pace. Personal computers, fax machines, pagers, PDAs, and cell phones are in the hands of millions of people worldwide.

Smart card history reaches back to the last millennium. In the 1990s demand in this technology soared to secure offline credit card transactions. Since then the number and variety of smart card-based applications have increased around the world. 

Some factors driving the growing interest in smart cards include the declining cost of smart cards and the growing concern that magnetic stripe cards cannot provide the protections necessary to thwart fraud and security breaches. The security issue alone may propel smart card technology to the forefront of business transactions.

Types of Smart Cards

The term “smart card” is loosely used to describe any card that is capable of relating information to a particular application such as magnetic stripe cards, optical cards, memory cards, and microprocessor cards. It is correct, however, to refer to memory and microprocessor cards as smart cards.

  • Magnetic stripe cards. A magnetic stripe card has a strip of magnetic tape material attached to its surface. This is the standard technology used for bank cards and can only store data which cannot be updated.
  • Optical cards. Optical cards use some form of laser to read and write to the card.
  • Memory cards. Memory cards can store a variety of data, including financial, personal, and specialized information, but cannot process information.
  • Microprocessor cards. Smart cards with microprocessors look like standard plastic cards, but are equipped with an embedded Integrated Circuit (IC) chip and card OS. They can store information, carry out local processing on the data stored, and perform complex calculations. These cards take the form of either “contact” cards (which require a card reader) or “contactless” cards (which use radio frequency signals to operate).

The Microprocessor Smart Card

The microprocessor smart card is defined as an IC chip contact card with a microprocessor and memory. The size of a credit card, this smart card contains a dime-sized microchip that can process and store thousands of bits of electronic data. Unlike passive devices (such as a memory card or magnetic stripe card) that can only store information, the microprocessor smart card is active and able to process data in reaction to a given situation.

This capability to record and modify information in its own non-volatile, physically protected memory makes the smart card a powerful and practical tool – smart cards are small and portable, they can interact with computers and other automated systems, and the data they carry can be updated instantaneously.