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.
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
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
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
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
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
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
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."
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.
in New Delhi