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Smart cards seem a sure bet

March 11, 1999
Web posted at: 3:37 p.m. EST (2037 GMT)

by Amy Leung

When digital culture meets print culture

Home gadgets of the future


Where have you used a smart card lately?

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(IDG) -- Smart cards: These credit card-size devices carry an embedded microprocessor and memory that can store and often process information. Applications range from telephony to transportation to electronic wallets and purses.

When was the last time you had to search for pocket change to pay for the bus or train? If you were in certain parts of the world, you could have used a smart card for that task. Smart cards, which contain a computer chip and memory, are growing in popularity for a number of applications, including transportation, telecommunications, debit purchasing, and health care. Some market factors have delayed their adoption in the United States, but use of the cards is now gaining momentum.

Smart cards are widely used throughout the world, and their acceptance has been significant in Europe and Asia. Within a few years, you will likely be using them too.

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Due to major involvement by the French government in smart card technology, the first real applications of smart cards appeared in France in 1985. With an initial order of 16 million cards, the French banking industry erected a milestone on the road to mass-market acceptance. One year later, France Telecom followed with 7 million telephone cards.

Several U.S. cities have conducted smart-card trials, but the cards have failed to win any popularity contests. By the time smart cards appeared in the United States, most of those niches had already been filled by magnetic-stripe cards. Americans have had so many years to fall in love with their magnetic-stripe cards that they will not easily break up the relationship.

Citibank, The Chase Manhattan Bank, Visa International, and MasterCard International each have launched pilots in several cities. The results have been the same in each program: Merchants were discouraged that too few consumers used the cards. Customer habits and limited infrastructure were the major barriers to success.

Despite the slow adoption rate, several U.S. industries are working to incorporate the technology into their businesses. We will soon see smart cards showing up, for example, as security devices for portable and desktop computers; log-in devices for electronic commerce; credit cards; electronic "purses" or electronic "wallets," similar to bank debit cards; transportation fare cards; and merchant "loyalty" cards, which give points for purchasing goods and services.

How they work

A smart card is a credit card-size plastic card that, unlike a credit card, has an embedded semiconductor, which lets it accept, store, and send information. It can hold as much as 80 times more data than magnetic-stripe cards, and the embedded semiconductor chip can be either a memory chip with nonprogrammable logic or a microprocessor with internal memory.

Smart cards typically fall into two general categories: contact and contactless. The chip communicates either directly via a physical contact or remotely via a contactless electromagnetic interface. Contact smart cards need to be inserted into smart card readers, which touch a conductive module on the surface of the card. Data, algorithm, and other information are transmitted via the physical contacts.

A contactless card, on the other hand, makes use of an electromagnetic signal and an antenna on each smart card to create the conversation between the card and the card reader. The microwave frequencies employed also provide the card with its power source. These nonbattery-powered cards need to come within 2 to 3 inches of the card reader to be powered. "Fast card" interfaces, such as those used by transportation fare cards, have greatly benefited from the contactless interface, which allows a customer to quickly wave the card near the device, instead of inserting and removing a card, which can slow down lines.

A third category is commonly referred to as hybrid or combi, although strictly speaking, the two are different. Hybrid cards are dual-chip cards; each chip has its respective contact and contactless interface, and they are not connected to one another inside the card. Combi cards, in contrast, carry only a single chip that has both contact and contactless interfaces, either of which can communicate between chip and card reader.

In addition to differences in card interfaces, there are two types of chips used inside smart cards: memory chips and microprocessor chips. Smart cards with only memory chips are simply storage devices that cannot process information. The cards are very similar to magnetic-stripe cards in this respect, although they hold more data. Memory cards are less expensive than microprocessor cards and have correspondingly less security. Memory cards can support basic applications, such as telephone cards.

Smart cards with microprocessor chips can do far more than memory-chip cards. The microprocessor lets a card not only store information, but also add, delete, and manipulate data in its memory. It can handle complex algorithms; for example, a health care card can offer a doctor and a pharmacist different levels of data access while allowing anyone to read basic information, such as name and emergency contact number. You might think of a microprocessor smart card as a miniature computer on a plastic plate: It can support applications that offer advanced services with a high degree of data security.

A smart card basically consists of three parts: a plastic card with or without a magnetic stripe; an electronic module supporting the electrical contacts; and a silicon integrated circuit. All of the components -- central processing unit, memory, and I/O -- are in the same integrated circuit chip with electrical connections tying them together. Thus it is difficult for foreign signals to tamper with the interconnections of the components inside the chip; this enhances the security of the smart card.

The enterprise role

The need for security and protection of privacy is growing as electronic forms of identification multiply in our computing-pervasive world. The increasing popularity of the Internet and the expansion of corporate networks have accelerated the demands to prevent unauthorized data access.

The basic value of smart cards lies in their capability to store personal information with a high degree of security and portability. They provide hacker-resistant storage for protecting private keys, account numbers, passwords, and other forms of personal data. Smart cards also isolate security-critical computations involving authentication, digital signatures, and key exchange from other parts of the system.

Together with digital certificates, smart cards can even enhance authentication between parties, control access to intranets and extranets from outside the firewall, and protect the privacy of data, files, and e-mail. And smart cards provide portability for securely moving private information among systems at work, at home, or on the road. Smart card users will not need to memorize their passwords or employ a different password for every application; they can carry the cards with them.

Technology time line

The smart card market in the United States has been driven, thus far, by technology rather than by consumers, but changes are on the horizon.

In recent years, the banking, health care, telecommunications, transportation, and especially personal computer and software industries have been enthusiastically incorporating smart card technology into their businesses. Several forces are converging to drive smart card deployment and increase the market demand in this country, including multi-application card development, card operation standards, falling costs, and new marketing methods.

Developers working on enhancing the smart card technology include Bull, Gemplus, Hewlett-Packard, Schlumberger, and Siemens Nixdorf, as well as industry giants IBM and Microsoft. Even the U.S. government is gearing up to meet the goal of having all government employees use a single smart card for a range of purposes by 2001, according to MasterCard.

With the rampant growth of the Internet -- a public and notoriously insecure data network -- security concerns are high in corporate consciousness. Smart cards can play a vital role in relieving the fears of IT managers, and should also appeal strongly to users. For applications such as Internet commerce, smart cards offer far more security protections to consumers than today's magnetic-stripe cards. If you like a sure thing, smart cards are a safe bet.

Amy Leung a former technology analyst at the InfoWorld Test Center, is a product manager at Uniscape, in Redwood Shores, Calif.

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Bull Personal Transaction Systems
CardTech SecurTech
Europay International
Personal Computer/Smart Card workgroup
Smart Card Industry Association

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