A smart card is a plastic card embedded with either a microprocessor and a memory chip or only a memory chip with non-programmable logic. The smart card may optionally have a magnetic or optical strip for permanent data storage. While the card itself may be of any shape or size, usually it is the size of a typical credit card. The smaller sized SIM cards used in mobile phones are also smart cards. The key characteristic of a smart card is that it carries all necessary functions and information on the card itself and does not require access to any external data source to complete a transaction. Typically, though, the transactions are uploaded onto a remote database at end of day or some periodic interval.

How did smart cards evolve?

In 1968, German inventors Jürgen Dethloff and Helmut Grötrupp applied for the first integrated circuit card related patents. Similar applications followed in Japan in 1970 and in France in 1974. Initially three companies: Bull, Philips and Schlumberger invested heavily to develop the technology. In 1977, French banks completed their specifications for a smart card payment system and a year later, the first prototype was produced. In 1983, the smart card was used nationwide when it was adopted by the French PTT as a public telephone payment system. The first health card application was born in 1986, again in France.

In India, the smart card was first used extensively by the GSM mobile telephony operators as SIM cards. The next major usage was driving licenses and vehicle registration certificates, initiated in Gujarat and Madhya Pradesh. On a smaller scale, smart cards are being used in India for corporate ID, student ID, bank credit card, etc.

What are the different types of smart cards?

Smart cards can be classified based on the type of embedded processor, the type of memory stripe and the communication system.

Based on the type of processor there are two types of smart cards: Memory cards and Microprocessor cards. The Memory Card has no microprocessor on the card and relies on the card reader or an external application for its data processing needs. These cards offer minimal security and hence are used mostly in low to medium security applications. Memory cards are also of two types: Storage only Memory card and Memory Card with Register. The former type has a re-writeable memory and is often used in loyalty applications. The latter type is not re-writeable. It starts with a set of stored values, which decrease with use. These cards are predominantly used for pre-paid telephone and vending machines. The Microprocessor card has an on-board CPU and operating system to manage access to the data within. This card offers a high level of security and is used to store electronic money, sensitive data or security keys.

Based on type of memory stripe, there are two types of cards: magnetic and optical. A magnetic stripe is made of magnetic particles which can be used to store binary data based on magnetic polarity. An optical stripe is similar to a compact disc and works on the same principle, i.e. a high intensity laser beam is used to burn data and a weak laser beam is used to can read it.

Based on the communication system, smart cards are of three types: contact, contact-less and hybrid. In contact cards, the chip with the contact pad (plate) is embedded in the card and the card must be inserted into a smart card reader which will physically touch the chip’s pad to transmit/receive data. In contact-less cards, an antenna coil is embedded with the chip and the card must pass close to a smart card reader to do a transaction, so that the embedded antenna can communicate with a receiving antenna in the reader. A hybrid card is one that has both contact and contact-less capabilities. It is often used for transport applications, wherein the contact mode is used to load the card with value and the contact-less mode is used to reduce the value based on the toll.

What are the advantages of smart cards?

The difference between a smart card and a conventional card is that the smart card has computing capabilities required to complete a transaction, while the conventional card needs to connect to a network to complete a transaction. Based on this USP, advantages can be built up. Never the less, there are several benefits that are generic to smart cards. The first is that of user convenience based on the size and weight of the card. The second is that it can be used anywhere, even where the network is not present. The third is that of identifying the owner and his privileges.

What are the most common applications of smart cards?

The most common applications of smart cards are as follows.

Bank Credit and Debit cards

Transit cards for buses, trains, toll roads, etc.

Identity cards for corporates, colleges, driving licenses, door keys, computer access, etc.

Health record cards

Vehicle health record cards, particularly for fleet vehicles

Loyalty cards, typically for airlines, hotels, retail stores, etc.

Citizenship cards, immigration cards, etc.