A smart card resembles a credit card in size and shape. The inside of a smart card usually contains an embedded 8-bit microprocessor. The microprocessor is under a gold contact pad on one side of the card.

Magnetic stripe technology remains in wide use in the United States. However, the data on the stripe can easily be read, written, deleted or changed with off-the-shelf equipment. Therefore, the stripe is really not the best place to store sensitive information. To protect the consumer, businesses in the U.S. have invested in extensive online mainframe-based computer networks for verification and processing. In Europe, such an infrastructure did not develop -- instead, the card carries the intelligence.

The microprocessor on the smart card is there for security. The host computer and card reader actually "talk" to the microprocessor. The microprocessor enforces access to the data on the card.

Smarts cards may have up to 1 kilobyte of RAM, 24 kilobytes of ROM, 16 kilobytes of programmable ROM, and an 8-bit microprocessor running at 5 MHz. The smart card uses a serial interface and receives its power from external sources like a card reader. The processor uses a limited instruction set for applications such as cryptography.

The most common smart card applications are:

• Credit cards / Gift cards
• Computer security systems
• Wireless communication
• Loyalty systems
• Banking
• Government identification

Smart cards can be used with a smart card reader attached to a personal computer to authenticate a user. Smart card readers can also be found in mobile phones and vending machines.

These links will help you learn more:

• Smart Card Basics
• Smart Card FAQ
• PC/SC WorkGroup
• How Microprocessors Work
• How Microcontrollers Work
• MSDN page for Smart Card and Reader Access Functions