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Smart Cards and Usability

What is a smart card and how is it used?

A smart card is a card similar in size to today's plastic payment card that has a chip embedded in it. By adding a chip to the card, it becomes a smart card with the power to serve many different uses.

As an access-control device, smart cards make personal and business data available only to the appropriate users. Another application provides users with the ability to make a purchase or exchange value. Smart cards provide data portability, security and convenience. Smart cards help businesses evolve and expand their products and services in a changing global marketplace. Banks, telecommunications, computer software and hardware companies, and airlines all have the opportunity to tailor their card products and services to better differentiate their offerings and brands. The combination of applications available on smart cards also may help them to develop closer relationships with their customers.

What is the potential for the smart card business?

Today, there are fewer than one billion smart cards in use. Market researcher Dataquest forecasts that by the year 2001, 3.4 billion smart cards will be used worldwide. Smart card activities are growing at 30 percent a year, predominately outside the U.S. Over the next five years, the industry will experience steady growth, particularly in cards and devices to conduct electronic commerce and to enable secure access to computer networks. Within the same time frame, smart cards are expected to be used in 95 percent of the digital wireless phone services offered worldwide. Asia, Latin America and North America are areas believed to be of greatest potential in the next three years. Globally, the uses that have emerged so far are for payphones, wireless telephony, Internet access, banking, healthcare and pay TV.

Why is interoperability crucial to widespread adoption of smart card use?

Even though there are hundreds of smart card pilots in existence around the world, users may not take a card from one country or scheme and use it in another. In order to accelerate the widespread acceptance of multiple-application smart card technology , interoperability - compatibility between cards, card-reading devices, and applications -must be achieved. To do this, the industry must examine the business and technical issues surrounding the need for standardized interfaces between cards, terminals and slots, which is the key to securing dramatic growth for the industry.

What role does "standards" play in smart card use?

Standards are required to ensure that cards and card-accepting devices are built to uniform specifications. This ensures that cards manufactured and issued by one industry sector in one part of the world can be accepted by a device in another part of the world. These cards and devices may support many different types of industries so that, for example, payment cards may be accepted in card-accepting devices at gas stations. This is possible because there are international standards in place.The International Organization for Standardization (ISO) has developed standards for smart cards. These standards were developed for use by multiple industries.

Individual industries are now developing proprietary versions of these ISO standards to support their own specific smart card applications. These are designed to conform with the standards issued by ISO. The goal is to ensure uniform standards for smart cards that will allow interoperability of cards among a wide array of industries.
What are the major benefits that smart cards offer consumers?

The benefits depend on the application. In general, applications supported by smart cards benefit consumers where their lifestyles intersect with information access and payment-related processing technologies. Some of these benefits include: the ability to manage or control expenditures more effectively, fraud reduction, reduced paperwork and elimination of the need to complete redundant, time-consuming forms, the potential of having one card with the ability to access multiple services, networks and the Internet.

You will hear the terms "chip card," Integrated circuit card," and "smart card" used to refer to a plastic card with a chip. Are these different types of technology?
There are three types of integrated circuit cards: simple memory card, hardwired logic card and microprocessor card. The term smart card is used in different ways by different organizations, but the Forum defines a smart card as a card with a chip.

What is a multiple application card?

The smart card has the capability of carrying multiple applications. A multiple application card can support different types of applications (e.g., healthcare, financial services, travel, and loyalty programs) on the card itself thereby reducing the number of cards in the wallet.For example, Visa's multiple application card plans call for a card to include a combination of Visa-developed credit, debit and stored-value functions along with member-developed Java cardlets such as loyalty programs, local transit applications or drivers license programs. This open architecture will allow Visa issuers to add applications to existing cards after they have been issued while maintaining security "firewalls" between applications.A hybrid chip and magnetic stripe card is in use with nearly 60,000 students, faculty and staff at the University of Michigan and Western Michigan. The multi-application card features personal identification and dormitory security, banking, and a wide range of stored value functions for the purchase of food, books, photocopying and vending services.

What is a contact less card?

There are two types of contactless cards. The first is a contactless proximity card in which the card is read by inserting it in a special reader. The second is a remote contactless card in which the card can be read from a distance, such as at a toll booth.

How is a chip card different from the magnetic stripe card that I carry in my wallet?

Existing magnetic stripe cards have limited capacities to carry information. A smart card carries more information than can be accommodated on a magnetic stripe card. It can make a decision, as it has relatively powerful processing capabilities that allow it to do more than a magnetic stripe card (e.g., data encryption).
How many chip cards* have been issued worldwide?

According to the consulting firm Frost & Sullivan, more than 676 million chip cards were issued in 1996. The approximate breakdown is as follows: 575 million phone; 15 million GSM; 36 million financial; 30 million dataq & ID cards, 17 million pay TV, and 3.8 million other cards.*includes memory and microprocessor cards
What is the cost of an average chip card?

Trying to respond to this question is like asking the cost of a car without defining whether it is a used VW or a new Rolls Royce. Chip cards range from $.80 to $15 depending upon their capacity and quantities.

Why is reloadability important to the development of the smart card vis-a-vis disposable cards?

There are markets for both disposable and reloadable cards. Disposable cards work well for an event and as a collectible card. Disposable is also desirable when people are traveling or visiting a location and may only want to purchase a stored value card for a specific amount of time. If the card is a multiple application card supporting for example debit and/or credit and stored value, the customer would not want to throw this type of card away. It would be more appropriate that the stored value application be reloadable.A standalone reloadable card (as opposed to a standalone disposable card) is very attractive to some customers. This customer would tend to be someone who uses their stored value on a frequent basis perhaps for public transportation, corporate cafeteria etc. and wants to be able to reload the card on a periodic basis rather than have to buy a new card each time.

How secure and confidential are smart cards?

Smart cards actually offer more security and confidentiality than other financial information or transaction storage vehicles. A smart card is a safe place to store valuable information such as private keys, account numbers, passwords, or valuable personal information. It's also a secure place to perform processes that one doesn't want exposed to the world, for example, performing a public key or private key encryption. Chip cards have computational power to provide greater security, allowing verification of the cardholder. Entering a PIN is one method of verification. The benefit of the smart card is that you can verify the PIN securely, off-line.


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