A smart card, typically a type of chip card, is a plastic card that contains an embedded computer chip–either a memory or microprocessor type–that stores and transacts data. This data is usually associated with either value, information, or both and is stored and processed within the card’s chip. The card data is transacted via a reader that is part of a computing system. Systems that are enhanced with smart cards are in use today throughout several key applications, including healthcare, banking, entertainment, and transportation. All applications can benefit from the added features and security that smart cards provide. According to Eurosmart, worldwide smart card shipments will grow 10% in 2010 to 5.455 billion cards. Markets that have been traditionally served by other machine readable card technologies, such as barcode and magnetic stripe, are converting to smart cards as the calculated return on investment is revisited by each card issuer year after year.
First introduced in Europe nearly three decades ago, smart cards debuted as a stored value tool for payphones to reduce theft. As smart cards and other chip-based cards advanced, people found new ways to use them, including charge cards for credit purchases and for record keeping in place of paper.
In the U.S., consumers have been using chip cards for everything from visiting libraries to buying groceries to attending movies, firmly integrating them into our everyday lives. Several U.S. states have chip card programs in progress for government applications ranging from the Department of Motor Vehicles to Electronic Benefit Transfers (EBTs). Many industries have implemented the power of smart cards in their products, such as the GSM digital cellular phones as well as TV-satellite decoders.