What are smart cards?
Instead of fumbling for coins, imagine
buying the morning paper using a card charged with small
denominations of money. The same card could be used to pay for a ride
on public transportation. And after arriving at work, you could use
that card to unlock the security door, enter the office, and boot up
your PC with your personal configuration.
In fact, everything you purchase,
whether direct or through the Internet, would be made possible by the
technology in this card. It may seem far-fetched but the rapid
advancements of semiconductor technologies make this type of card a
reality.
In some parts of the world, the “smart
card” has already started to obsolete cash, coins, and multiple
cards. An essential part of the smart card system is the card reader,
which is used to exchange or transfer information.
Why is the smart card replacing the
magnetic strip card?
Because the smart card can hold up to a
100 times more information and data than a traditional magnetic strip
card. The smart card is classified as an integrated circuit (IC)
card. There are actually two types of IC card—memory cards and
smart cards.
Memory cards contain a device that
allows the card to store various types of data. However, they do not
have the ability to manipulate this data. A typical application for
memory type cards is a pre-paid telephone card.
These cards hold typically between 1 KB
and 4 KB of data. A memory card becomes a smart card with the
addition of a microprocessor. The key advantage of smart cards is
that they are easy to use, convenient, and can be used in several
applications. They provide benefits to both consumers and merchants
in many different industries by making data portable, secure, and
convenient to access.
History of Smart Cards
Bull CP8 and Motorola developed the
first “smart card” in 1977. It was a two-chip solution consisting
of a microcontroller and a memory device. Motorola produced a single
chip card called the SPOM 01.
Smart cards have taken off at a
phenomenal rate in Europe by replacing traditional credit cards. The
key to smart card success has been its ability to authorize
transactions off-line. A smart card stores the “charge” of cash,
enabling a purchase up to the amount of money stored in the card.
Motorola’s single chip solution was
quickly accepted into the French banking system. It served as a means
of storing the cardholder’s account number and personal
identification numbers (PIN) as well as transaction details. By 1993
the French banking industry completely replaced all bankcards with
smart cards.
In 1989 Bull CP8 licensed its smart
card technology for use outside the French banking system. The
technology was then incorporated into a variety of applications such
as Subscriber Identification
Modules (SIM cards) in GSM digital
mobile phones. In 1996 the first combined modem/smart card reader was
introduced. We will probably soon see the first generation of
computers that read smart cards as a standard function.
In May 1996 five major computer
companies (IBM, Apple, Oracle, Netscape, and Sun) proposed a standard
for a “network computer” designed to interface directly with the
Internet, and it has the ability to use smart cards. Also in 1996 the
alliance between Hewlett Packard, Informix, and Gemplus was launched
to develop and promote the use of smart cards for payment and
security on all open networks.
Besides e-commerce, some smart card
applications are:
■ Transferring favorite addresses
from a PC to a network computer
■ Downloading airline ticket and
boarding pass
■ Booking facilities and appointments
via Websites
■ Storing log-on information for
using any work computer or terminal
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