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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