WHAT IS A SMART CARD?

A smart card, chip card, or integrated circuit card is a physical electronic authorization device, used to control access to a resource. It is typically a plastic credit card-sized card with an embedded integrated circuit chip. 

A smart card is a physical card that has an embedded  integrated chip that acts as a security token. Smart cards are typically the same size as a driver’s license or credit card and can be made out of metal or plastic. They connect to a reader either by direct physical contact (also known as chip and dip) or through a short-range wireless connectivity standard such as radio-frequency identification (RFID) or near-field communication (NFC) The chip on a smart card can be either a microcontroller or an embedded memory chip. Smart cards are designed to be tamper-resistant and use encryption to provide protection for in-memory information. Those cards with microcontroller chips can perform on-card processing functions and can manipulate information in the chip’s memory.

Smart cards are used for a variety of applications, though most commonly are used for credit cards and other payment cards. Distribution of smart cards in recent years has been driven by the payment card industry’s move to support smart cards for the EMV payment card standard. Smart cards capable of short-range wireless connectivity can also be used for contactless payment systems; they can also be used as tokens for multifactor authentication.

International standards and specifications cover smart card technology, with some focused on industry-specific applications. In the United States, smart card technology conforms to international standards (ISO/IEC 7816 and ISO/IEC 14443) championed by the Smartcard Alliance.

The first mass use of smart cards was the Télécarte, a telephone card for payment in French pay phones which launched in 1983. Smart cards are now ubiquitous and have largely replaced magnetic stripe (also known as “mag stripe”) card technology, which only has a capacity of 300 bytes of non-rewriteable memory and no processing capability.

How smart cards work

Smart card microprocessors or memory chips exchange data with card readers and other systems over a serial interface. The smart card itself is powered by an external source, usually the smart card reader. A smart card communicates with readers either via direct physical contact or using a short-range wireless connectivity standard such as RFID or NFC. The card reader then passes data from the smart card to its intended destination, usually a payment or authentication system connected to the smart card reader over a network connection.

Uses of smart cards

Smart cards are generally used in applications that must deliver fast, secure transactions and protect personal information such as credit cards and other types of payment cards, corporate and government identification cards and transit fare payment cards. Smart cards are also sometimes used to function as documents such as electronic passports and visas.

Smart cards are often designed to be used with a PIN, for example, when they are used as debit or ATM cards. Organizations also use smart cards for security purposes; in addition to their use as multifactor authentication tokens, the cards can also be used for authenticating single sign on users.

Types of smart cards

Smart cards can be categorized on different criteria including by how the card reads and writes data, by the type of chip implanted in the card and by the capabilities of that chip. Some of the different of types of smart cards include:

• Contact smart cards are the most common type of smart card. Contact smart cards are inserted into a smart card reader that has a direct connection to a conductive contact plate on the surface of the card. Commands, data and card status are transmitted over these physical contact points.
• Contactless smart cards require only close proximity to a card reader to be read; no direct contact is necessary for the card to function. The card and the reader are both equipped with antennae and communicate using radio frequencies over the contactless link. A contactless smart card functions by being put near the reader to be read.
• Dual-interface cards are equipped with both contactless and contact interfaces. This type of card enables secure access to the smart card’s chip with either the contactless or contact smart card interfaces.
• Hybrid smart cards contain more than one smart card technology. For example, a hybrid smart card might have one embedded processor chip that is accessed through a contact reader as well as an RFID-enabled chip used for proximity connection. The two different chips may be used for different applications linked to a single smart card, as when the proximity chip is used for physical access to restricted areas while the contact smart card chip is used for single sign-on authentication.
• Memory smart cards contain memory chips only and can only store, read and write data to the chip; the data on memory smart cards can be over-written or modified, but the card itself is not programmable so data can’t be processed or modified programmatically. Memory smart cards can be read-only and used to store data such as a PIN, password or public key; they can also be read-write and used to write or update user data. Memory smart cards can be configured to be rechargeable or disposable, in which case they contain data that can only be used once or for a limited time before being updated or discarded.
• Microprocessor smart cards have a microprocessor embedded onto the chip in addition to memory blocks. A microprocessor card may also incorporate specific sections of files where each file is associated with a specific function. The data in the files and the memory allocation are managed with a smart card operating system. This type of card can be used for more than one function and is usually designed to enable adding, deleting and otherwise manipulating data in memory.

Smart cards can also be categorized by their application, such as credit card, debit card, entitlement or other payment card, authentication token and so on.

WHAT IS A SMART CARD READER?

Smart Card Authentication

The term smart card has several different meanings. In a broad sense, it refers to any plastic credit-card-size card that has a computer chip (a memory chip and/or a tiny microprocessor) embedded in it to hold information that can be changed (as opposed to less “smart” cards that use a magnetic strip that holds static information). A smart card reader—a hardware device—is needed to write to and read the information on the card. Smart cards can be used for different purposes, but one of the most popular is for authentication. Satellite television services use smart cards in the SATV receiver to identify the subscriber and that subscriber’s service level. Banks use smart cards for conducting transactions. These cards are especially popular in Europe.

Smart cards can also be used for network logon authentication. This provides an extra level of security, the “something you have” factor. The cards are generally resistant to tampering and relatively difficult for a hacker to compromise, because they are self-contained. They’re also inexpensive in comparison with biometric authentication devices.

Smart cards used for logon authentication generally store a digital certificate that contains user identification information, the user’s public key, and the signature of the trusted third party that issued the certificate, as well as a time for which the certificate is valid. The certificates are stored on the cards by an authorized administrator. To log on with a smart card, a user must insert the card in the reader or swipe it through and enter a PIN that is associated with the card. If the PIN is compromised, an administrator can change it or issue a new card. To use smart cards for network logon, the computer must run an OS that supports smart card authentication, such as Windows 2000, Windows XP, or Windows Vista.

A number of companies manufacture smart cards and readers. Some vendors make keyboards that have built-in smart card readers, and there are combination fingerprint scanner/smart card readers for providing both card-based and biometrics security. Although smart cards provide for extra security, they (like all authentication methods) are not foolproof. Many cryptographers have been able to “break” smart card encryption. In general, there are two methods for defeating smart cards: logical and physical. An example of a logical attack is erasing parts of the data on the embedded microchip by raising or dropping the voltage; in some cases, this activity “unlocks” the security without deleting the data. A physical attack might involve actually cutting the chip out of the card and using a laser-cutter microscope to examine it. Although a determined attacker might be able to crack the smart card in this way, these methods are not easy and they don’t always work.

With the vast proliferation of card readers on the market and advancements in technology, it may come as no surprise that the world of card readers has grown. There are a variety of different card readers on the market, each especially designed and built to cater to a wide range of businesses’ payment acceptance needs.

In this post, we’ll consider some of the most prominent types of card readers and discuss an ideal choice for your business based on industry type. 

5 different types of card readers

Below are some of the most common types of card readers that a merchant might be able to choose from, some of which can print receipts, offer online payment services such as Payment Requests or payment via QR code provide refund & tipping options and multi-operator modes, making it easier for employees and business owners alike.

Payment terminals are suitable for a variety of business types, and although we cover some of the different types, this is not an exhaustive list:

Mobile card readers (also remote or wireless)

Mobile card readers don’t limit a merchant to one location, but rather, enable the merchant to take payments on the go. In order to process payments, they are connected to the Internet via a SIM/DATA card, or through Wi-Fi, and process payments using GPRS technology.

The industries which often make use of mobile card readers are taxi drivers, delivery couriers, and tradespeople. 

Portable card readers

Similar to mobile card readers because they are mobile and can be used on the move, you can take portable card readers directly to the customer instead of waiting for them to approach the countertop device.

Those devices need to be connected to the Internet, usually via DATA SIM or Wi-Fi, although other options are available. The difference between portable and mobile card payment machines is that mobile ones are usually designed to be used on the move.

Restaurants are typical examples of industries and businesses that use portable card machines

Virtual card readers

Because global borders are shrinking and customers from across the globe can flock to your business – whether making a booking at your hotel and accommodation business or making a purchase from your e-commerce store – MO/TO payments, or “mail order, telephone order” payments are becoming an important part of the payments landscape.

As a result, virtual terminals were developed to help merchants accept payments via phone or via email, by receiving their customer’s card data and manually entering it on a secure payment gateway. You must have an active Internet connection for a virtual terminal to operate.   

Countertop / tabletop

The countertop card reader is a /stationary device, which usually stays on the merchant’s countertop, hence the name.

This type of card reader isn’t mobile, which is discussed in more detail below, and instead of a merchant going to the customer, in this scenario, it is the customer who needs to approach the card reader in order to make the payment. These types of devices are most commonly found in the retail industry. 

SoftPOS apps

Finally, in the last category in our list are softPOS solutions. Essentially, these are apps that can turn your mobile phone into a payment terminal or card reader with no additional hardware required to read the cardholder’s information and to communicate this information to the relevant parties in the payment acceptance process.

This solution makes it easy for professionals on the go, couriers and delivery professionals, seasonal markets, food trucks, freelancers, and more. 

FEATURES OF A CARD READER

What is the main features of a card reader?A memory card reader is a device, typically having a USB interface, for accessing the data on a memory card such as a CompactFlash (CF), Secure Digital (SD) or MultiMediaCard (MMC). Most card readers also offer write capability, and together with the card, this can function as a pen drive.

ADVANTAGES OF SMART CARD READERS

What is an advantage to using a card reader?

With a card reader, you no longer have to worry about having too much cash in your cash register, which means it’ll help save your business from robbers and frauds. Card readers use a variety of security measures that can keep hackers and other online criminals away.3 Jul 2019