Growth of Smart Cards

On the surface, the smart card is a means of gathering up loose change and loose economic threads, and moving toward a cashless society. In the real world, almost everyone carries paper money, coins, credit cards, checks, and the occasional debit card. These are the currently accepted financial instruments used in everyday transactions of money and credit. One or all of these instruments are accepted by whomever we choose to do business with. As the year 2000 draws near, the likelihood exists that stored value cards, often known as smart cards, will all but eclipse the use of small bills and coins (Morrall, 1995).

Most of us are familiar with the use of the credit card, which in reality is a preapproved method of processing small loans. The magnetic strip along one side of a credit or ATM card is a vital link in electronic banking which makes the adaptation of debit and smart cards a reality. With a single swipe of a card through a reader, plus the application of a pin number, computer systems can verify and authorize the transfer of credit or cash (Allen, 1995a).

With silicon chip technology being added to the format of the credit card, the debit and the smart card became a reality. The debit card has been marketed in the United States chiefly as a means of paying for different services. The acronym POS (point of service) has been coined specifically to describe this usage. Debit cards are electronically ‘written’ with a prepaid amount of credit, and subsequent debts are subtracted by a computer ‘reader’ until the card has been exhausted (Morrall, 1995).

Many telecommunications, transit, and retail businesses are issuing these cards for use within a closed system. Some of these cards have sufficient memory built in to their systems to allow a ‘writer’ to reload them. Debit cards are limited in their capabilities and are largely disposable (Allen, 1995a).

Smart cards are capable of much more then either debit or cred…

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