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1. Introduction to Smart Cards

If you have been to France in the last few years and you had to make a phone call, you probably ended up using TeleCarte, the smart card that France Telecom uses as a calling card. You were probably aware that the little golden stylized spider on it was not just for decoration, but most likely you did not know that that little thing of the size of a credit card was a 16 MHz microprocessor with up to 64 kb of memory (for non-techies, the first IBM PC ran at 4.77 MHz and had 128 kb of memory ­p; but was a bit larger and more expensive!) Production costs for a stored value card such as a TeleCarte are about $0.25. More sophisticated cards cost about $3 to $10 to produce.

Smart Card, What Are You?

The official definition of smart card is "an integrated circuit card with memory capable of making decisions." It is therefore not a magnetic stripe card, like the typical US credit card, that has a capacity of 300 bytes of non-rewriteable memory and no processing capability. It is not a memory card, like some devices of the size of a credit card able to store a few megabytes of data using optical technology. However, it is also not a PC card ­p; also known as PCMCIA ­p; which can be much more intelligent and have more memory, but is much thicker and rigid, requires a very delicate connection based on a couple dozen pins, and costs at least ten times as much as a smart card.

Smart cards differ along four main dimensions:

  1. Memory: from 1 to 16 kb (there are currently prototypes with 64 kb);

  2. Processor speed: from 4 to 16 MHz;

  3. Interaction: physical contact, proximity (near-contact, but no wearout), and radio;

  4. Software: card operating system and installed applications.

History and Future ­p; In Thirty Years

The first computer-on-a-chip was born in 1971 in Intel's laboratories. In 1974 Roland Moreno, a French independent inventor, mounted a chip on a card and devised a system to use the card for payment transactions. He showed his invention to a few French banks, and by the end of the year Honeywell Bull had produced the first CP8 Transac cards.

The early adopters of the new card were both French: France Telecom and Carte Bancaire. The first company is the state-owned telecommunications monopoly, it decided to issue tamper-proof calling cards. The second is now the leading French credit card network, it began by using the CP8 Transac to issue VISA and MasterCard credit cards (the card still had a magnetic stripe in order to preserve international compatibility).

In the European standard for digital mobile telephony GSM, a smart card is used as a form of identification of the user. A slot in all GSM telephones allows the user to be identified independently of the equipment. This means that a user could borrow a friend's phone after his had run out of credit, but still have the call billed to his, not his friend's account.

As of 1995, Europe accounted for 342 of the estimated 484 million smart cards used worldwide. In the United States smart cards were used mainly for access control and corporate ID, but the number of these cards is negligible (well under 1 million).

At the 1996 Olympic Games in Atlanta VISA launched a cash card, available in the disposable and reloadable versions. The card has a stored value of money, and can be used for small purchases at participating merchants or, more typically, at vending machines. The VISA Cash Card is also now available in Argentina, Australia, Canada, Colombia and Spain, and a pilot project is currently being run in New York by VISA, MasterCard and Citibank.

Go to next section: Uses of Smart Cards

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2010: Two Alternative Scenarios
Advantages of Smart Cards, Smart Cards and Electronic Commerce
Disadvantages of Smart Cards
4. The Smart Card Industry
5. Java and Smart Cards
6. Bibliography
7. Abstract