A smart card, also called a chip card or an integrated circuit card (ICC) may look just like a magnetic-stripe credit card, but it’s not. Most smart cards hold a computer chip that contains a microprocessor, which, unlike a magnetic-stripe card, is able to receive and process data. Smart cards are used for identification, to hold important records, and for financial transactions. There are a number of different types of smart card technology, and new types continue to be developed as more secure systems are sought and new uses are invented for them.
Overall, many distinguish smart card technology into contact cards and contactless cards which have a different relationship to the card reader, which is often called a CAD or Card Accepting Device, and Vault Cards™. A contactless card, also referred to as a proximity card, has an embedded antenna and makes a wireless connection to the card reader.
The contact cards are the most common form of smart card technology. These cards are the ones with the chip, which appears as a small gold plate. When the contact card is inserted in a CAD, the CAD makes contact with the chip, enabling the transfer of information. There are two types of contact cards: memory cards — which may have straight memory, protected/segmented memory, or stored value memory — and CPU/MPU cards. Straight memory cards have the most data storage, but they only store data and are essentially miniature floppy disks. Protected/Segmented memory cards can write protect some of the data they hold, can restrict access through a password, and have read/write capability.
Stored value memory cards have permanent security features, but all or nearly all memory is taken up with storing the value or tokens they hold. A sample use is a phone card. The card may be either rechargeable or disposable, depending on design. CPU/MPU cards or microprocessor multifunction cards are capable of data processing. They have the ability to securely identify users and update information.
Java cards are another type of smart card technology. They differ from other smart cards in the language they use — Java rather than assembly language — as well as in using applets, small applications. Sun Microsystems®, now a part of Oracle®, is continuing the development of the Java card.