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SMART CARD APPLICATION AREAS

The first chip cards were simple prepaid telephone cards implemented in Europe in the mid-1980s, using memory cards. Today, the major active application areas for microprocessor-based smart cards include information security, banking and credit cards, communications, government programs, physical access security, transportation, retail and loyalty, health care, and university identification. These are intersecting areas - smart card may carry applications from more than one area (e.g. combining information and physical security access, or financial and retail loyalty).

Here are some major industries and their smart card applications:

WHY CONSIDER SMART CARDS?

IF a portable record of one or more applications is necessary or desirable, AND

• Records are likely to require updating over time
• Records will interface with more than one automated system
• Security and confidentiality of records is
• important

THEN, smart cards are a feasible solution for making data processing and transfer more efficient and secure.

Advantages of Smart Cards:

• The capacity provided by the on-board microprocessor and data capacity for highly secure, off-line processing
• Adherence to international standards, ensuring multiple vendor sources and competitive prices
• Established track record in real world applications
• Durability and long expected life span (guaranteed by vendor for up to 10,000 read/writes before failure)
• Chip Operating Systems that support multiple applications
• Secure independent data storage on one single card

Barriers to Acceptance of Smart Cards:

• Relatively higher cost of smart cards as compared to magnetic stripe cards. (The difference in initial costs between the two technologies, however, decreases significantly when the differences in expected life span and capabilities- particularly in terms of supporting multiple applications and thus affording cost sharing among application providers- are taken into account).
• Present lack of infrastructure to support the smart card, particularly in the U.S., necessitating retrofitting of equipment such as vending machines, ATMs, and telephones.
• Proprietary nature of the Chip Operating System. The consumer must be technically knowledgeable to select the most appropriate card for the target application.
• Lack of standards to ensure interoperability among varying smart card programs.
• Unresolved legal and policy issues related to privacy and confidentiality or consumer protection laws.

Comparison with Magnetic Stripe Cards

The increasing complex performance and application requirements of today's card systems have spurred interest in smart cards as an alternative to magnetic stripe cards, or as an enhancement to magnetic stripe cards in the form of a hybrid card which can support more than one technology (a smart card micro-module and a magnetic stripe).

More Examples of Smart Card Applications:

Financial Applications

• Electronic Purse to replace coins for small purchases in vending machines and over-the-counter transactions.
• Credit and/or Debit Accounts, replicating what is currently on the magnetic stripe bank card, but in a more secure environment.
• Securing payment across the Internet as part of Electronic Commerce.

Communications Applications

• The secure initiation of calls and identification of caller (for billing purposes) on any Global System for Mobile Communications (GSM) phone.
• Subscriber activation of programming on Pay-TV.

Government Programs

• Electronic Benefits Transfer using smart cards to carry Food Stamp and WIC food benefits in lieu of paper coupons and vouchers.
• Agricultural producer smart marketing card to track quotas.

Information Security

• Employee access cards with secured passwords and the potential to employ biometrics to protect access to computer systems.

Physical Access Control

• Employee access cards with secured ID and the potential to employ biometrics to protect physical access to facilities.

Transportation

• Drivers Licenses.
• Mass Transit Fare Collection Systems.
• Electronic Toll Collection Systems.

Retail and Loyalty

• Consumer reward/redemption tracking on a smart loyalty card, that is marketed to specific consumer profiles and linked to one or more specific retailers serving that profile set.

Health Care

• Consumer health card containing insurance eligibility and emergency medical data.

Student Identification

• All-purpose student ID card (a/k/a campus card), containing a variety of applications such as electronic purse (for vending machines, laundry machines, library card, and meal card).

SMART CARD APPLICATIONS IN THE U.S.

Because of the significant investment in an extensive magnetic stripe-based infrastructure, and the availability of reliable and low cost, on-line telecommunication services, the U.S. has thus far represented a limited smart card market. Smart card projects implemented in the U.S. have been primarily closed systems deployed on military bases, universities, corporate campuses, and by the banking and credit card industries. The exception to this has been the movement by the Federal Government to use smart cards in Electronic Benefits Transfers for food stamps and other social programs nationwide.

The Federal Government's ultimate goal is to adopt a limited number of multi-application smart cards that will support a wide range of Government-wide and agency-specific services. It is envisioned that eventually every Federal employee will carry smart cards that can be used for multiple purposes such as identification, building access, network access, property accountability, travel, and other administrative and financial functions.

The introduction of smart cards to personal computing is probably the most exciting change in digital history. We believe that smart cards and other systems with a security microcontroller will literally be the key to the access and exchange of digital data over the Internet. It took forty years from the initial idea of two German engineers in the 1960s to the sophisticated systems available today. It is hard to imagine that the little piece of silicon, embedded in a credit card size plastic already has the calculating power of 1980-era computers.

Yearly billions of cards are deployed worldwide, mainly in Europe and Asia. We think that this trend will continue and smart cards will take off in the U.S. Currently millions of cards are deployed in the U.S., mainly by the banking industry. It won't be long until there is a smart card in nearly every wallet - for banking, healthcare, electronic ID, cell phone identifier, or web access.

MORE ABOUT SMART CARDS

Smart cards (a/k/a chip or integrated circuit cards or ICCs) are plastic cards containing a microcontroller. The embedded microcontroller transforms a credit card-sized piece of plastic into a portable, tamper-resistant computer with a calculating power of the original IBM PC. Although most smart cards still use 8-bit microcontrollers, 32-bit systems already line up for next generation cards. The same happens with the available on-card memory, which quickly becomes larger.

Smart cards are either contact or contactless. Most smart cards are "contact" cards, distinguished by a visible set of golden electrical contact pads. "Contactless" smart cards contain an antenna rather than the golden contact pads of regular smart cards. Contact cards require a card reader; contactless cards use radio frequency signals to operate. Both types can be printed with the issuer's artwork and information. Smart cards can only be as intelligent, imaginative, and attractive as their designers make them.

Smart cards have diffused worldwide in the form of prepaid and reloadable payment, telephone, travel, and health care cards. It is the latest advance in payment card technology, user authentication, and access control to computer systems.

Billions of cards are deployed in the U.S., mainly by the healthcare, banking, and credit card industries. Public transportation and other services are also employing smart card technology. This trend will continue and smart cards will become prevalent in the United States for a variety of applications. It won't be long until most people have smart cards in their wallets for banking, healthcare, electronic ID, loyalty, cell phone identifier, or web access token.

A multitude of suppliers of smart cards and smart card readers is out there. The differences between products are confusing and often obscured by colorful sales brochures. To make matters worse, the fight over industry standards is not yet over. This can make choosing the smart card technology for your needs overwhelming. This site is intended to give you a comprehensive overview and some starting points.

CardWerk offers consulting services to help you choose the right smart card system.

Part of this page is an excerpt from U.S. General Services Administration Smart Card Tutorial