WHY SMART CARDS ?

Magnetic Stripe vs. Chip (Smart Cards)

Nowadays, the most extended technology is the one based on magnetic bands. Almost everyone in the world has a card, usually for financial purposes, at the back of which there is a dark brown band. This magnetic band resembles a piece of magnetic tape of a music cassette. Its purpose is to store information such as the name of the holder, the number of the account, the type of card, and the PIN. It can be said that the magnetic band identifies the user with the machine to which it connects (ATM, POS terminal, etc.) and the latter, in turn, connects on-line with other devices, performs a series of operations and stores certain information on each transaction.

There are at least 4 fields where the potentiality inherent in the chip gives Smart Cards a clear advantage. Therefore, it is not unrealistic to foresee, without fear of making a mistake, that the chip will soon replace magnetic band cards.

+1. Transaction Cost: As mentioned before, from the moment that identification occurs, the magnetic band needs to contact a host or a host network in order to perform the transaction. Thus, the latter are actually the ones in operation, the magnetic band being mainly a passive component of transactions. With magnetic band cards there is a clear need for on-line connection, whether at the moment that the transaction is performed or later on, in some clearly predefined cases. Connection through magnetic band cards entails substantial communication costs. On the other hand, Smart Cards operate much in the same way as a computer does. The chip is an active component capable of performing operations by itself, storing a great deal of information and executing transactions by use of said information and other information provided by the device to which it constantly connects. This makes it possible for a quantitatively important part of the transactions to be performed without resorting to telecommunications, and translates into substantial savings in each transaction.

+2. Security: The contents of the magnetic stripe, because of the technology it uses, may be read and manipulated inadvertently and relatively easily by people with the proper knowledge and means. The chip, however, uses a much more sophisticated internal technology that almost eliminates the risk of it being physically manipulated. Additionally, due to its internal capacity, the chip is able to take part in and support more complex cryptographic processes (DE3, 3DES, RSA, etc.)

he data stored in a Smart Card are protected by sophisticated security mechanisms. Therefore, it is very difficult and expensive to fraudulently alter the data or copy the cards. The transition from magnetic band cards to Smart Cards considerably reduces the possibility of fraud from card forgery.

+3. Storage Capacity: The amount of information that can be stored in a magnetic stripe is small (134 bytes) and static, wherefore the relationship between the card user and the issuer is one-dimensional: it is only updated when the exchange occurs via sophisticated hardware. On the other hand, the chip, in addition to its larger information storage capacity (currently up to 1 MB), has the capacity to manage said information, which opens new possibilities for exchange between the user and the card issuer.

he development of technologies for multiple applications results in several applications being capable of residing at the same time in a single card: credit/debit card, electronic purse, air tickets, fidelity points, and security identification, among many others. Needless to say, it is impossible to implement a multiplication technology in a magnetic stripe card.

+4. Flexibility: Smart Card technology is compatible with the main types of operating systems. Their programming environment provides for the creation, storage or deletion of applications, which means that it is possible to develop custom-made smart cards by selecting the applications that best adapt to the circumstances and needs of each individual.

These characteristics widely differentiate magnetic stripe cards from Smart Cards and make the dissemination of Smart Card technology applied to plastic cards highly attractive. As a result, the image of the Smart Card has popularized and is increasingly and more commonly accepted and recognized.