Smart Credit Cards Overview

The wide development of technologies has also influenced credit cards. Its impact can be observed in the introduction of the so called smart cards, which are based on cryptography. A microprocessor is built in the card, which provides the smart card with several characteristics.

First of all the user should confirm his/her identity every time s/he uses the smart card. After this encryption sign and countersign-like exchanges are executed by both the card and the card reader. This is done in order to get a verification of the legitimacy of the corresponding counterparties. After this process is finished, the transaction is executed in an encrypted way. This is done in order to prevent any potential defrauding of the system by means of eavesdropping.

The user cannot see the whole process. Only the needed parts for entering a PIN needed for the execution of the transaction are shown.

The microprocessor built in the smart credit cards provides a number of advantages, some of which are:

• Possibility of different types of transactions.
• More enhanced memory and processing capabilities than the traditional magnetic-stripe cards.
• The ability to accommodate several different applications on only one credit card.
• Identification information storage.
• Tracking the participation of the card holder in different programs (e.g. loyalty programs).

The roots of smart cards can be traced back to the 1980s in France. Their use has grown so much that they are expected to wholly replace the now used plastic cards. The trend also points to the increasing international acceptance of smart cards in the years to come. Now, smart cards can be used only by people who participate in special programs. However, having in mind the competition in the field, the scope of clients will be soon enlarged.

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