What Are Smart Cards?

A smart card, with a microprocessor chip.

What is a smart card? A smart card, also known as a chip card or integrated circuit card (ICC), is an electronic authorization device found on many credit cards and forms of identification. Smart cards resemble credit cards, but what differentiates a smart card between a regular credit card is the embedded microprocessor. These embedded chips are more used in the replacement of the magnetic strip found on credit cards. Smart cards can hold onto a large amount of valuable information such as identity and security checks within their microprocessors.

What Can Smart Cards Be Used For?
Identity Protection
Public Transit
Schools
Hospitals
Benefits of Using a Smart Card
How Smart Cards Work?
Contact Smart Card vs. Contactless Smart Card
Disadvantages Of Using Smart Cards
Conclusion

What Can Smart Cards Be Used For?

Smart cards are more commonly used for ATM transactions, credit cards, mobile sim cards, pre-payment cards, access badges in facilities, public transport cards, and phone payment cards. Electronic wallets are smart cards with chips that can be pre-loaded with cash to make purchases.

Identity Protection

Smart-cards can also authenticate someone’s identity. The card will hold onto encrypted information that can identify the cardholder. The cards can allow user access to a building or any other infrastructure that needs security. For example, testosterone boosters were bought at an all-natural supplement shop in Arkansas. Unfortunately, the person who purchased the supplements had never been in the state of Arkansas. What had happened was, because the victim did not have an updated ATM card with a smart chip on it, the suspect was able to purchase the victim’s card number on the dark web. From there, the suspect created a counterfeit card with a magnetic stripe on it and was able to purchase his supplements. If the victim had a smart card, authorities could have been able to track the thief’s movements better. Because magnetic-stripe cards are easier to clone and only broadcast bank information onto a payment system. According to a report by Credit Karma, magnetic chips only need a card number and expiration date for user to be able to complete transactions.

Public Transit

Smart cards are often used as transit passes. When riders purchase these cards, they are given a certain number of credits to use on their ride. One of the biggest downfalls is that the transit operator and the government can track down a user’s movement.

Schools

Smart cards are now being provided to students at schools and colleges. These cards can track students’ attendance, loans from the library, and control access to restricted buildings and dormitories. The cards can also track what types of food the student eats at the cafeteria, and are often electronic purses that can be used to pay for items at vending machines, laundry facilities, and cafeterias.

Hospitals

Hospitals frequently use smart cards to restrict access to specific parts of the building, protecting patients from the outside contaiminates. Smart cards used in hospitals also help secure patient information and allow for medical records to be stored in a secure manner.

Hospitals frequently employ smart chips for their access cards to allow movement between different facilities

Benefits of Using Smart Cards

Smart cards can hold an enormous amount of information, and many different applications can be stored on their chips. The chip can be programmed to hold banking credentials, user identity, medical information, and student information. Smart cards can be an ID, credit card, and point reward system all in one.

Although magnetic stripe technology is still widely used, smart chips are being employed more and more often, it is seen as safer compared to the magnetic stripe. The information on the magnetic strip can easily be changed, deleted, or altered. The whole point of the microprocessor being on the smart card is for security.

How Smart Cards Work

Smart cards need a smart card reader to function. When the contact pad of the smart card comes into contact with a card reader, it can connect both of them electronically. From there, you can enable your card to make transactions by selecting items on the Point of Sale system.

Contact Smart Card vs. Contactless Smart Card

Most smart cards are contact smart cards. Credit cards, SIM cards, and ATM cards typically fall under this category. These smart cards work when you insert them into a card reader, and the reader connects with the contact pad of the memory chip. From there, the user authorizes payment on the reader. In short, contact smart cards are smart cards that need to come into contact with a smart card reader before they can be used.

Contactless smart cards are the complete opposite. They do not need to come into contact with a smart card reader to be used. The cards take advantage of radio frequencies or NFC tech (near field communication) that allows you to form a wireless connection within the card. One of the most popular uses for contactless cards is for accessing facilities within buildings. A mix of both cards exist and are known as hybrid smart cards, but they are rare.

Disadvantages Of Using Smart Cards

Unfortunately, because smart cards are so new, people have been slow to understand how much information is stored on their cards. Unlike a magnetic stripe credit card, smart cards hold valuable information about the user, and because the technology is so new while the form of the card itself is not, people do not realize the importance of securing their cards physically.

Because smart cards require both a microprocessor and a chip reader to pass along encrypted data, chances of a hacking breach could be detrimental to its users. For instance, the convenience store chain, WaWa, had it’s customers data breached. Hackers were able to place malware on its point-of-sale terminals and had 800 locations affected. In total, more than 30 million customers had their identity stolen. Because of attacks like these, attacks on smart cards are more likely to be stronger and harder to control in the future.

Conclusion

Despite the hacking vulnerability, smart cards are here to stay. They are more secure compared to the classic magnetic strip by allowing encrypted information be validated through signatures and a pin number combination. As time goes on, we predict the microprocessors will be more secure. The main benefit, however, is the added protection. With a smart card you get authentication processes, secure data storage, encryption, secure communications, and even biometrics.