A smart card is a plastic card, usually a credit or debit card, that’s embedded with a chip that encodes some information. The chip can serve as an additional layer of security when the card holder conducts transactions. Today, most card transactions in the U.S. utilize this technology.
Read on to learn more about how these cards work, what benefits they offer, and how they are likely to evolve in the future.
Key Points
• Smart cards enhance security with embedded chips storing encrypted data.
• Used in various card types (especially credit and debit), smart cards offer versatility.
• Access to the card’s functionality may require PIN or biometric data./p>
• Increased security through data encryption and tamper-resistance reduces smart cards’ hacking vulnerability.
• Future developments include password replacement and additional storage capabilities.
Definition and Basic Concept
Smart cards are typically metal and plastic cards with a computer chip embedded in them. The chips contain additional information that can add a layer of security to transactions. You may also hear they referred to as chip cards or EMV cards (EMV stands for Europay, Mastercard, and Visa, the companies that pioneered the technology).
If you’re using smart cards for in-person transactions, you might insert them in a reader or tap to pay, in which case the card transmits information through wireless technology rather than directly through the physical chip.
While there are several different uses for smart cards, probably the most common use is in debit cards connected to a checking account or credit cards.
Components of a Smart Card
Most smart cards are fairly simple and straightforward. Here are some key points to know:
• There is usually some sort of embedded or integrated circuit in the card that contains information about the card itself. For a credit or debit card, this might be account information like the account number, expiration date, and the name of the account holder.
• Generally, smart cards are powered by an external source, usually the card reader. Smart cards usually communicate with external card readers in one of two ways. This might be through a direct physical connection, such as an EMV chip on a credit card when it’s inserted into a card reader. Another way that smart cards communicate with a card reader is wirelessly, such as via the RFID (radio frequency identification) protocol when you use contactless checkout.
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Types of Smart Cards
If you are looking to get a credit card or other form of smart card, you’ll want to be aware of the different types of smart cards. Here are three common varieties:
• Contact smart cards: This is the most common type of smart card. A contact smart card is inserted into a card reader through a direct physical connection, such as an EMV chip on a smart credit card.
• Contactless smart cards: Contactless smart cards are becoming more prevalent and transmit card information and other data wirelessly. A contactless smart card uses a tiny embedded antenna to send information to a nearby card reader, without direct physical contact.
• Hybrid smart cards: Hybrid smart cards are usually cards that have both a physical chip (to use as a contact smart card), as well as the ability to function as a contactless smart card. You can use many debit cards as hybrid smart cards, since they both have an EMV chip as well as the ability to tap to pay wirelessly without a direct physical connection.
Each of these types of smart cards can be used in a variety of ways, such as credit cards, debit cards, and transit cards.
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Key Features and Capabilities
Smart cards have a few key features and capabilities that you’ll want to be aware of.
• Data storage: Smart cards can hold a small amount of data. In a smart credit card, that means the card itself can contain account information such as the account number, cardholder name, and the card expiration date. Having this information stored internally can help make smart cards more secure than credit or debit cards that do not have this information. Smart cards can also allow users to access sensitive information with a PIN or biometric data.
• Processing power: Many smart cards contain small microprocessors inside the card itself. These microprocessors allow the card to process data directly without a remote connection.
Security Measures in Smart Cards
One of the most common uses for smart cards is to provide a more secure way of transmitting data. Credit cards, for example, used to store account information such as the credit card number on a magnetic strip. That left sensitive financial information potentially vulnerable to thieves or hackers using a magnetic field or electronic interference. Smart cards help mitigate that risk and increase security.
The data stored in a smart card is typically encrypted, which makes it more difficult for hackers to access those personal details. Additionally, the data stored on most smart cards can’t be easily changed or updated. This tamper-resistant feature of smart cards makes it a great use for sensitive information such as checking account or debit card information. When available, using a PIN or biometric data can help to increase security even more.
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Future of Smart Card Technology
Smart cards are commonly used in many facets of society. Beyond smart credit and debit cards, smart cards are used as hotel key cards, transit cards, and access badges for secure areas.
While nobody knows exactly how smart card technology will evolve in the future, here are a few possibilities for what the future of smart cards might include:
• Passwords: Smart cards may evolve to replace passwords in some instances, either instead of or in conjunction with a user’s PIN or biometric data (such as facial recognition).
• Data storage: Smart cards may be used for blockchain or health data storage in the future.
• Size or format: Currently, most smart cards are similar in size to credit cards or a driver’s license, but we may see other sizes or formats in the future.
• Increased personalization and protection: The data and processing power in a smart card can drive a higher level of personalization, making it more difficult for unauthorized use of smart cards.
The Takeaway
Smart cards are physical cards that also have chips embedded in them, typically storing encrypted information in the card itself. Smart cards are commonly used today as credit and debit cards, and they may have an EMV chip, wireless “tap to pay” technology, or both. Smart cards are generally considered to be more secure than cards with information stored in another way (such as on a magnetic strip), which is one reason why they are becoming more common.
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FAQ
How does a smart card enhance security compared to traditional cards?
A smart card can contain sensitive banking information that’s encrypted and is stored on the chip’s embedded card. This can allow it to enhance security compared to a traditional card that stores account information only on a magnetic strip. The vast majority of debit and credit cards today use either the EMV chip or support wireless technology such as tap to pay or offer both types of functionality.
Can smart cards be used for multiple purposes?
Yes, it is common for smart cards to be used for multiple purposes. For example, many transit systems allow you to use a smart credit or debit card as your transit card as well. This means that you don’t need to carry a separate transit card with you as you access public transportation.
Are smart cards vulnerable to hacking or data theft?
There are very few things in the world that are completely invulnerable to hacking or data theft. However, smart cards are generally thought to be more secure than cards that store information in other ways, such as on a magnetic strip. This is one of the reasons that many merchants have moved away from having you swipe a credit card at the point of sale and instead have you insert the EMV chip or tap to pay.
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