Smart Card Technology: What They Do and How They Work

By David Smith

We live in a smart world where technological trends and advancements are making life easier for everyone. Making payments and shopping online across various platforms has never been this swift and secured in the 21st century. Smart card technology is the fuel driving this convenient means of making payments and carrying out online transactions. 

Smart cards are providing a safer and secure means of conducting financial transactions.

Smart cards are now common in every economy across the world - they are being used by almost everyone that receives a paycheck. The idea of a smart card is to reduce the archaic manner in which people carry cash about and feel insecure owing to prying eyes and numerous cases of heists associated with moving large chunks of cash about. 

Essentially, smart cards are providing a safer and secure means of conducting financial transactions while making life easier in a world that is going cashless. These cards are called ‘smart’ for a reason, and that is what we’ll be looking at. 


What Smart Card Technology is all About 

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Smart card technology involves making a tiny rectangular piece of card smart. These cards are tiny enough to fit in your wallet or back pockets, and that’s where the first convenience it affords can be seen. 

Various institutions ranging from banks, companies, business enterprises, and many other institutions make use of smart cards for different purposes. The cards can come in different sizes, but they all share one thing in common; the technology that drives them. 

This smart technology enables users to store specific information unique to them which they can use to make payments and other transactions without involving physical cash.


Why Are They Labeled ‘Smart Cards’?

They are called smart cards because they aren’t just cards, they are cards bearing a substantial amount of private information and data limited to a particular user: the owner of the card. 

These cards have memory chips embedded in them that are microprocessors with the capacity to store a lot of information about its users. These users can utilize the technology to carry out online financial transactions such as shopping without cash in hand, making payments like electric bills, and transferring funds to a second party. 

With microprocessors, the cards are now smart because they are capable of housing information and making use of them as the occasion demands.


How Smart Cards are Constructed 

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The construction of a smart card entails four basic steps: designing, fabrication, coding, and data loading. 


1. Designing 

This is the first step which requires the designer or programmer to allocate a memory size to the chip, specify the clock speed, the volatile memory types, and the operating system. 

It also requires the programmer to create application software for the card while specifying the card type and any other features he might want to include in the card. 


2. Fabrication of the Chip 

    The chip made of silicon is being fixed into the card at this second stage. This silicon chip is being linked to connectors with connecting wires either by soldering them or by bounding them together. 

    After this, the chip on the board substrate is sealed with an epoxy resin and glued directly to the substrate of the card. The substrate here is the plastic which can be made of polyvinyl chloride (PVC) or any other synthetic plastic. 


    3. Coding 

      This is an integral step where the foundation for the functionality of the card is laid. In this step, the codes are being entered into the chip memory using special commands. 


      4. Data Loading

        This is the stage where the intended user's personal data is being loaded into the memory chip.


        How the Smart Cards Work 

        Like mentioned earlier, smart cards are like the regular cards you can find around you (the same size and made of the same plastic material) but they have a memory chip contained in a contact pad. 

        The contact pad bearing the embedded memory chip is the basis for which a transaction can be made using a smart card. Once this contact pad is detached, the card is no longer smart. 

        Smart cards are like the regular cards you can find around you but they have a memory chip contained in a contact pad. 

        Smart cards don’t work alone - they need a smart card reader to function. When certain relevant personal information has been written into the smart card by its issuers, you’ll need a card reader where you can slot in the card, punch in your personal security code, and carry out any transaction. 

        It is the contact pad that comes in real contact with the card reader and subsequently establishes an electronic interaction between itself and the card reader. 

        This then enables you to make payments via a Point of Sale (POS) system or other mediums to carry out transactions. However, some smart cards don’t require a card reader interface to function - contactless cards are increasing in popularity due to their convenience. 


        Categories of Smart Cards 

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        Smart cards are classified based on the mechanism of the cards and their configuration. 


        Classification Based on Mechanism

        This classification is based on the workings of the card and how they are being used. Under this category we have:


        1. Contact Smart Card 

          This is about the most common smart card in existence. Most credit cards, ATM cards, and SIM cards fall into this category. 

          Smart contact cards work by inserting it into a card reader and with the contact pad bearing a memory chip where information is being stored, the card reader can read whatever is written on the card and allow the user perform any transaction he intends doing. 

          They are called smart cards because they come in contact with a medium before they can function. The medium, in this case, is any digital interface like the smart card reader that allows for the transmission of information from the card to the reader. 


          2. Contactless Smart Card 

            Just like the name implies, it’s a contactless smart card and does not need to come in any physical contact with an interface before you can make use of it. 

            There are no card readers or digital interfaces to create a connection and subsequent transaction in the case of contactless smart cards. These kinds of cards make use of radio frequencies or Near Field Communication (NFC) technology that establishes a wireless connection between the card and wherever you intend using it. 

            The proximity contactless smart card is a typical example. The proximity card has only a sizeable memory space, can only be read and not written to. It means you can’t save anything on this card, you can only use the configuration on it to access restricted places, devices or gain access into a building. 

            If you are trying to access a building, all you do is to flash the card at the interface in the automated security door and you are granted access after your personal data have been accessed and verified. 


            3. Hybrid Cards

              The hybrid cards are a powerful aggregation of both types of cards in this category. These cards can function as a contact smart card and also as a contactless smart card as the occasion demands. 

              They have both technologies embedded in them to function in such dual capacities. These cards quite rare, existing in a class of their own. 


              Classification Based on Configuration 


              1. Memory Cards 

                These are smart cards that are only for a temporal basis. Their memory capacities are extremely low which is why their functions are quite limited to certain activities or usage like reading, writing data and storing a limited amount of information required for a peculiar function. 

                Whatever data that is written on them can’t be edited or changed. It is static and can only perform one job description at a time after which it loses its relevance and most times it’s been discarded after usage. 


                2. Microprocessor Cards 

                  The microprocessors are like mini-computers that are being made so portable that they can be hidden in your pockets. These smart cards have larger memory spaces to accommodate tons of data. 

                  The processors are just like your traditional computers and are made to work using a software (operating systems), so you can read information on them, write to them, rewrite a written data, edit and manipulate whatever they contain at will. 


                  Conclusion 

                  The major highlight of the smart card technology is the security it affords users. With the smart card, users can store personal information like bank records, student identity to access exclusive libraries, company identity cards to gain access through computerized security checkpoints, storing phone contacts as in sim cards and many other huge benefits that guarantee the security of personal data. 

                  Shopping is being made easy as the need for cash dissipates into scarcity and the portability of making payments go viral. Smart cards have come to stay and will form a major part of our tech lives for years to come. 




                  About the Author

                  David Smith is a cryptographer with 12 years of experience in both the public and private sectors. He is currently working on his second startup which tracks and interprets the use of contactless payments in the Greater China region.