What is a smart card?

The appearance of a smart card is akin to a credit card in size and shape. It is a plastic card embedded with microprocessor chip or memory chip. The microprocessor embedded under a gold contact pad on one side of the card can be compared to minicomputer. When the chip is processed by a chip reader, it basically communicates to the host computer and transmits in-memory information securely and quickly. The data processed and stored in the chip is associated with either value, information, or both. The chip in the smart card is tamper proof and it provides enhanced security for cardholder’s personal data and financial transactions. This protection is based on the data encryption standard (DES) which is approved by International Standard Organisation (ISO) as safe enough for protecting electronic funds transfer (EFT) transactions. The ISO 7816 defines the physical features and ISO 10202 defines the security features. The smart cards with a microcontroller chip have the ability to perform on-card processing functions and it can add, delete and manipulate information in the chip’s memory. Smart cards are now universal and are fast replacing magnetic stripe card technology which has a capacity of only 300 bytes of non-rewriteable memory and no processing capability.

Smart cards are available in two types i.e. contact smart cards and contactless smart cards. As the name itself explains a contact card requires contact with a card reader and a contactless smart card utilizes radio frequencies or Near Field Communication (NFC) to send information through the airwaves wirelessly. The contact less cards are mainly used as an identification card used by the  employees of an organization to gain access to a particular room or protected floor of a building. Smart cards have a variety of uses, ranging from health care IDs that store patient information and medical histories to transit passes which make travel easier. The contact less cards are also used for banking and other financial transactions. Reserve Bank of India after examination of trade-off between security and convenience in certain type of contact less card transactions clarified that a customer who seeks credit card/debit card or smart card etc. cannot be compelled to do contact less card payments.

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