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Disadvantages of Smart Cards
The biggest problem facing smart cards is security and the problem is two fold. The first issue is that not all smart cards are in fact secure. VISA and MasterCard developed a new standard, SET, in early 1996 in an attempt to get the entire industry on a standard of encryption. Additionally, there are standards such as DES which have been around for years, usable in all forms of encryption which are being used in smart cards. But still some smart cards are not inviolate. Mondex, a maker of banking smart cards, solves this problem by making its transactions possible only between Mondex cards. But in order for smart cards to reach their full potential, they must be able to interact with a host of interfaces. And they must do so securely.
The second issue with security involves public perception of the technology. People must believe that the cards are secure. This depends to a great extent upon actual security, but people must also be convinced of it. And once people are comfortable that the card is secure, they must still be confident that Big Brother isn't somewhere collecting and analyzing all of the information gleaned from the smart cards' use.
A third issue concerns who holds responsibility for the card. If the cash balance is wiped clean by a memory failure, who is liable, the person or the bank? If a transaction is not recorded, where are the lines drawn? Currently companies have begun to write out agreements in order to draw boundaries, but these will have to be ones which consumers are comfortable with in order for people to begin to use smart cards.
The final problem which smart cards will face in their move to diffuse extensively involves product complements. While smart cards themselves are fairly cheap, card readers are not (costing between $50 and $200). However, in an effort to make smart cards more pervasive, companies such as Netscape and Microsoft are proposing putting software in packages they make. Additionally, Gemplus has created a new pocket reader and other companies are considering adding readers to keyboards.
Go to next section: 4. The Smart Card Industry
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