Smart Cards: Usage Stats

The term "smart card" came up in 1980, not in the

US, but in France–for a change. Roy Bright of the government’s marketing

organization Intelimatique–as part of a major French campaign to export the

technology–coined the term. France had earlier put in big money to push the

technology in the 1970s, during a period of major national investment in

modernizing the nation’s technology infrastructure.

Even today, it’s in Europe that smart cards are most

prevalent. However, according to the Smart Card Industry Association (SCIA)–a

global trade association providing information on the smart card industry and

technology–while in 1996, 70% of the worldwide smart card market was in

western Europe, it is likely to come down substantially to 40% by 2000. The

Asian market is projected to gain a substantial share of the market–from 10%

in 1996 to 30% this year. North America has been a late and slow adopter of the

technology. In 1996, it occupied a mere 3% of the worldwide market, though SCIA

expects the share to go up to 12% in 2000. American consumers still regard smart

cards as a redundant payment mechanism as checks, credit cards and ATM cards do

an adequate job for their current needs.

Intelligence embedded

Smart cards today find application in a wide number of areas

such as banking, health care, loyalty and transportation. They have fast gained

recognition as intelligent cousins of magnetic stripe cards so widely used as

credit cards and point-of-sale transaction cards. The magnetic stripe typically

stores about 200 coded characters. This storage capacity is insufficient for

highly complicated transactions in an increasingly networked world. Moreover,

these cards don’t lend to any modification, addition or deletion of data,

which is often required in application areas such as toll collection.

A smart card, on the other hand, uses an IC chip to address

the shortcomings of magnetic stripe cards–the chip being sealed within the

card. Ideally, the chip comprises three components: ROM, processor and

electrically erasable programmable read-only memory (EEPROM). The programs

needed to record or modify data are stored on the ROM. The processor runs these

programs to make calculations during a transaction, and the results are recorded

on the EEPROM.

SCIA classifies smart cards as contact, contact-less and

combination cards. Contact smart cards must be inserted into a smart card

reader. They have a contact plate on the face, which makes an electrical

connector for reads and writes to and from the chip when inserted into the

reader.

Contact-less smart cards have an antenna coil, as well as a

chip embedded within the card. The internal antenna allows for communication and

power with a receiving antenna at the transaction point to transfer information.

Close proximity is required for such transactions, which can decrease

transaction time while increasing convenience.

A combination card functions as both a contact and

contact-less smart card.

Smart cards today can store and process huge amounts of

information (8—64 kb), owing to rapid developments in the technology. Newer

data compression techniques can reportedly increase the storage by as much as 50

times. In addition, smart card-based systems are highly configurable to suit

individual needs.

One key factor that has led to a significant jump in the

usage of smart cards is the close integration of memory with the processor,

which lends to devising a tight logical security during transactions.

The normal design of the programs uses a personal

identification number (PIN) before any confidential information can be accessed.

The PIN and various other passwords included in the card can be concealed within

a ‘secret area’. This area can only be accessed by the card’s own

processor and the information contained in it is not passed to a card reader

until cleared by the card’s processor.

Attempts at standardization

Interoperability and standardization in hardware and

applications are crucial for widespread acceptability of smart cards. The

International Standards Organization (ISO) has issued ISO 7816 as the

international standard for smart cards that use electrical contacts. It defines

the following aspects:

• The physical dimensions of contact cards and their
  
  resistance to static electricity, electromagnetic radiation and mechanical
  
  stress

• The location,
  
  purpose and electrical characteristics of the card’s metallic contacts

• The voltage and
  
  current requirements for the electrical contacts defined above and
  
  asynchronous half-duplex character transmission protocol

• A draft standard
  
  to establish a set of commands across all industries to provide access,
  
  security and transmission of card data. Within this basic kernel, for
  
  example, are commands to read, write and update records

• Standards for
  
  application identifiers (AIDs). An AID has two parts. The first is a
  
  registered application provider identifier (RID) of five bytes that is
  
  unique to the vendor. The second part is a variable length field of up to 11
  
  bytes that RIDs can use to identify specific applications

• Encoding rules
  
  for data needed in many applications–name and photograph of the owner, his
  
  preference of languages.

ISO 10536 specifies similar characteristics for contact-less

cards. Several other ISO standards, which control local and global interchange

message specifications, card accepting devices and security architecture, have

been developed or are under review.

ISO specifications, however, do not address smart card

applications. Efforts, therefore, are on to create common application standards.

Europay International, MasterCard International and Visa International have

joined hands for the development of financial payment standards under the name

EMV. Such, industry-wide standards are yet to emerge in other smart card

application areas.

EMV in Europe

According to Europay International, "As of May 2000,

over six million EMV chip cards have already been issued by UK banks. This

number is expected to reach 15 million cards by the end of 2000 and 39 million

cards by the end of 2001. Today, EMV chip migration is underway in most European

markets, with implementations taking place or plans to introduce the technology

in the near future. France and Germany are the next large markets planning to

migrate their cards and acceptance infrastructures to the EMV standards. This

will include over 34 million cards in France from 2001. In Germany it is

estimated that from 2003, there will be approximately 73 million EMV chip

cards." Charlotte O’Connor, press relations manager, Europay

International, says, "The next release of the EMV specifications is planned

for December 2000. This will feature further improvements and will be backward

compatible with the version of May 1998."

Indian scenario

Bureaucratic delays have been a deterrent to the growth of

smart cards, especially in the financial segment. Financial institutions are yet

to see a clear-cut RBI guideline on the matter. "Unless this is done, banks

will not go beyond



the pilots," says G Satish, GM, PSI Data Systems–a company into
e-commerce and e-business solutions.

After several years of evaluation, the Smart Rupee System (SMARS)

Committee has finalized smart card standards for payment applications and the

RBI has asked the Bureau of Indian Standards (BIS) to review the report of the

working group that it had constituted in 1995. The report has been submitted

based on the live smart card project that was implemented at IIT Mumbai.

Such initiatives can significantly accelerate the use of

smart cards, along verticals. According to an estimate, plastic card users in

the US have to keep seven cards on an average for their different needs. They

view yet another card as an encumbrance, and hence are reluctant to adopt the

smart cards. Citizens in developing nations like India will certainly feel the

burden even more. Probably, on account of this, there is also a need to work out

cross-vertical standards, for instance, a smart card that caters to multiple

needs of users–ranging from financial payments to health care. Such a card

will certainly be considered "smart" and lead to massive deployment of

the technology across the globe.

DEEPAK KUMAR



in New Delhi