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smart card

By Ben Lutkevich

What is a smart card?

A smart card is a physical card that has an embedded integrated chip that acts as a security token. Smart cards are typically the same size as a driver's license or credit card 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 radio-frequency identification (RFID) or near-field communication.

The chip on a smart card can be either a microcontroller or an embedded memory chip. Smart cards are designed to be tamper-resistant and use encryption to provide protection for in-memory information. Cards with microcontroller chips can perform on-card processing functions and manipulate information in the chip's memory.

Smart cards are used for a variety of applications but are most commonly used as credit cards and other payment cards. The payment card industry's support of smart cards for the Europay, Mastercard and Visa (EMV) card standard has driven the distribution of smart cards. Smart cards capable of short-range wireless connectivity can be used for contactless payment systems. They can also be used as tokens for multifactor authentication (MFA).

International standards and specifications cover smart card technology. Some of those standards and specs are industry-specific applications. In the United States, smart card technology conforms to international standards -- International Organization for Standardization/International Electrotechnical Commission 7816 and ISO/IEC 14443 -- backed by the Secure Technology Alliance.

The first mass use of smart cards was Télécarte, a telephone card for payment in French pay phones, launched in 1983. Smart cards are now ubiquitous and have largely replaced magnetic stripe -- also known as mag stripe -- card technology, which only has a capacity of 300 bytes of nonrewriteable memory and no processing capability.

How smart cards work

Smart card microprocessors or memory chips exchange data with card readers and other systems over a serial interface. The smart card itself is powered by an external source, usually the smart card reader.

Smart cards communicate with readers via direct physical contact or using RFID or another short-range wireless connectivity standard. The chip or processor on the card contains data that the card reader accesses. The processor on the card contains a basic operating system (OS) that lets the card hold, transmit and protect the data.

The card reader passes data from the smart card to its intended destination, usually a payment or authentication system, over a network connection.

Uses of smart cards

Smart cards are generally used in applications that must deliver fast, secure transactions. They can protect personal information in numerous situations, including the following:

Smart cards, such as debit cards, are often used with a personal identification number (PIN). Organizations also use them for security purposes, as MFA tokens and for authenticating single sign-on (SSO) users and enabling passwordless authentication.

Types of smart cards

Smart cards are categorized based on criteria such as how the card reads and writes data, the type of chip used and its capabilities. They include the following types:

Smart cards can also be categorized by their application, such as credit card, debit card, entitlement or other payment card, authentication token and so on.

Advantages of smart cards

Smart cards offer several advantages, such as these:

Disadvantages of smart cards

While smart cards have many advantages, there also drawbacks, including the following:

Examples of smart cards

Examples of smart card applications include the following:

Future of smart card technology and applications

Smart cards are ubiquitous in the payment card industry, and they are widely used for business applications. They are likely to become a common alternative to passwords for authentication. It is also likely that the standard, wallet-sized smart card will be replaced with a smaller alternative.

As the financial industry changes, so will smart card uses and applications. As blockchain technology gains traction, smart cards are beginning to be used as wallets and payment cards for cryptocurrencies.

Security is a key benefit of smart cards. The technology makes it difficult to take personal credentials directly from the physical card. Unfortunately, cybercriminals have myriad ways of attaining this information. Learn how cybercriminals steal credit card information in the age of smart cards.

29 Dec 2021

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