A smart card is a security token that has an embedded chip. Smart cards are typically the same size as a driver's license and can be made out of metal or plastic. They connect to a reader either by direct physical contact (also known as chip and dip) or through a short-range wireless connectivity standard such as Near Field Communication (NFC).
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The chip on a smart card can be either a microcontroller chip or an embedded memory chip. Smart cards are designed to be tamper-resistant and use encryption to provide protection for in-memory information. Those cards with a microcontroller chip have the ability to perform on-card processing functions and can add, delete and manipulate information in the chip's memory.
The first mass use of smart cards was the Télécarte, a telephone card for payment in French pay phones which launched in 1983. Smart cards are now ubiquitous and are fast replacing magnetic stripe card technology, which only has a capacity of 300 bytes of non-rewriteable memory and no processing capability.
There are various international standards and specifications that cover smart card technology, with some focused on industry-specific applications. In the United States, smart card technology conforms to international standards (ISO/IEC 7816 and ISO/IEC 14443) and is championed by the Smartcard Alliance.
Various attacks are possible against smart card technology that can recover information from the chip. Differential power analysis can deduce the on-chip private key used by public key algorithms such as RSA while some implementations of symmetric ciphers can be vulnerable to timing attacks or differential power analysis as well. Smart cards can also be physically disassembled to gain access to the on-board microchip.
Eurosmart, a trade organization for smart security based in Brussels, forecast that nearly 9.8 billion devices using smart card technology will ship in 2016, with financial services driving demand due to the need to migrate to EMV payment cards -- cards equipped with a chip instead of just a magnetic stripe. The arrival of the Internet of Things and 4G wireless communications as well as machine-to-machine applications like Apple Pay will drive demand for smart card technology for some time to come.