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It is estimated that by the year 2018, five billion smart cards will be in use in over 100 countries covering 84 percent of the world's population. The first generation were credit cards with a magnetic stripe that allows electronic capture of card information, reduced processing costs and increased security. Adding an embedded computer chip to the card making it a smart card was the next logical step. Presently, smart cards are used primarily for telephones, healthcare, transportation, movies, fast food outlets, Internet, banking and loyalty programs.

In France , Telecom introduced the prepaid smart phone card in 1983 in response to the high cost of the public phone system and lack of security. The card could be purchased for various denominations and when inserted into the telephone will display the costs of the call and deduct it from the card. There are over one billion smart phone cards in use worldwide in about 80 countries. Smart cards are being in applications such as toll booths, gas stations, vending machines and arcade games. Smart cards are excellent for payments via the Internet as smart card readers are inexpensive (usually $25), low-power devices that can be easily attached to a computer's USB port.

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Smart cards speed the payment process, reduce the costs of handling cash, reduce fraud by protecting against counterfeit money and bad checks. They can streamline healthcare services by reducing routine paperwork, errors and fraud as well as speed the payment process. A patients medical history can be readily available for a pharmacist to check for medication incompatibility, although I believe privacy is still an issue to be addressed in this area. With billions of transactions occurring each day for transportation, the use of the smart cards allows passengers to easily ride buses and trains, pay for tolls and parking and even issuing airline tickets at the gate.

There are two types of smart cards. First, contact smart cards that require insertion into a reader and contactless smart cards which require only close proximity to an antenna via radio waves. A smart card has several advantages over a credit card including:

• Can store more than 100 times more information than a magnetic stripe.
• Is more reliable and can perform multiple functions.
• Provides increased security by reducing tampering and counterfeiting.
• Can be disposable or reusable.
• Provides a wide range of functions.

The following is a France Telecom comparative survey of different card technologies:

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There are different degrees of security used in smart cards. Those necessary for a memory-only card are less than for a microprocessor card. Many smart cards utilize password security (usually a four or five digit Personal Identification Number (PIN), however smart cards used to transmit by radio or telephone require encryption.

In my opinion, the question is no longer will smart cards be used in the U.S. , but what standards will be used and when? I believe that the use of smart cards for Internet purchases will not increase dramatically until 2003 when the majority of new computers will automatically come with a smart card reader built into the computer. This card must also have the ability to operate multiple applications and not limited to a specific card issuer or system integrator's proprietary software. To help make Internet banking more secure, computer makers will need to install an embedded security chip on the motherboard, and smart card access and encryption. These technologies will give customers additional levels of security and protection for the data and information they need.

The smart card industry in the United States is experiencing the union of PC, wireless and Internet to support smart card applications for security, financial transactions, electronic commerce and more.

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