A brief history of smart cards

A brief history of smart cards

The rapid growth of the Internet and the development of wireless digital communications would cause a significant change in the way people communicate. With the progress of the means of communication in the world, business models have also evolved. If earlier it was necessary to go to the store and personally meet with the seller, now it is enough to have an Internet connection. No need to leave your home or office. A few mouse clicks are enough to purchase goods or services. The rapid growth in the popularity of e-business leads not only to the emergence of new ways of trading. There are huge opportunities for companies to attract and retain customers, as well as to provide additional services.
The success of any company in the e-commerce market is determined, firstly, by the level of trust it has gained over the years of doing business using traditional methods, and secondly, by the availability of technologies that make it easier to conclude transactions in electronic form. The security and mobility of smart cards allows them to become a safe, reliable, convenient and efficient carrier capable of not only meeting the needs of electronic business, but also opening up a wide range of new applications.

The smart card has the same size as a regular credit card. But its plastic base is embedded with a silicon electronic chip designed for storing and processing information. In fact, a smart card is a miniature computer protected from unauthorized interference. Unlike magnetic stripe cards, smart cards are able not only to store information, but also to process it. Therefore, the transaction does not require access to remote databases.

A brief history

The idea of embedding an integrated circuit into a plastic card was first conceived by two German inventors – Jurgen Detloff and Helmut Krootrupp. This happened in 1968. Later they patented their invention in Germany. In 1970, independently of them, Kunitaka Arimura from the Japanese Institute of Technology Arimura also registered a patent for the invention of a smart card. However, real progress in this area began only after Roland Moreno registered 47 patents related to smart card technology in 11 countries from 1974 to 1979 [1]. In the late 70s of the twentieth century, the company CII-Honeywell-Bull (currently Groupe Bull) for the first time established serial production of products using smart card technology and introduced cards based on microprocessors.

The first tests of smart cards were carried out in France and Germany in the early 80s. They were used as prepaid phone cards and secure credit/debit bank cards. The success of these experiments has shown that smart cards have a high level of flexibility and are well protected from counterfeiting.
Recently, thanks to the development of chip manufacturing technologies and the advent of modern cryptography tools, smart cards have become much more versatile and reliable. Now they are used for storing electronic cash, as a replacement for paper banknotes, for reliable storage of personal medical records, to protect cable and satellite broadcasting networks from unauthorized access, as well as to increase the security of mobile communications.
Initially, smart cards became widespread in Europe and Asia, where they were widely used for cellular communications and banking operations. But in the late 90s, due to the development of electronic business in the United States, the demand for information security technologies began to grow. Therefore, smart cards have also conquered the American market.

Advantages of smart cards

The popularity of smart cards has begun to grow due to the benefits they provide. One of the advantages of smart cards is undoubtedly the built-in computing capabilities. Other important properties include protection, mobility and ease of use.
The processor, memory and I/O interface are implemented in one integrated chip embedded in the plastic base of the card. The smart card is protected from malicious attacks because it does not depend on potentially vulnerable external resources. To extract information from a smart card, you need physical access to it, additional equipment, as well as in-depth knowledge of the hardware and software of smart cards. The use of cryptographic algorithms can significantly increase the level of protection of smart cards. Data that is stored in the physical memory of the smart card,

it can be encrypted. Information for exchange between the smart card and the outside world can also be encrypted and supplemented with an electronic signature. In addition, to gain access to a smart card, its owner usually has to enter a PIN code (personal identification number), which allows to prevent the card from being used by persons without authority. In general, the smart card is much better protected than a traditional desktop computer.
Another advantage of smart cards is their inherent mobility. You can store a smart card in your wallet in the same way as regular credit cards. Thanks to such qualities, the data stored in the smart card is available at any time when there is a need for them, and
the cardholder has complete freedom of movement.
Smart cards are also very convenient to use. To start a transaction, it is enough to insert the card into the reader. After the operation is completed, it is necessary to remove the card from the device.

Areas of application

Smart cards are often used for secure data storage, authentication, and transaction security. In this section, we will give examples of smart card application areas.
In the telecommunications industry, prepaid phone cards provide a convenient mechanism for accessing pay phones. They are well protected from fraud, do not require special maintenance and eliminate the need to have cash with you. Currently, mobile communication has become one of the largest segments of the smart card market. In this industry, smart cards are used for security. The most significant example is the GSM digital cellular communication standard (global Mobile communication system). GSM wireless phones are equipped with a SIM card that performs the functions of the subscriber identification module. The size of this smart card is much smaller than the standard one, because it is connected to the connector located inside the phone. The SIM card is intended for

It is used to identify the user. In addition, it stores encryption keys that ensure the confidentiality of voice communication. Intercepting mobile phone numbers and reprogramming phones for their illegal use becomes a very difficult task. The encryption key generated by the SIM card is temporary and changes after each connection. Therefore, even if an attacker manages to decrypt the GSM communication session parameters, they will be invalid for the next connection. Due to the fact that subscriber identification data is stored in a SIM card, any GSM cellular phone compatible with it can be used for communication. The subscriber receives a SIM card from a mobile operator and inserts it into a phone that can be purchased or rented from other suppliers.

Cellular communication has become very widespread, and mobile TV backgrounds are now not just a means of communication. In order to remain competitive, mobile operators offer additional services, such as mobile banking, mobile commerce, Internet access, etc. All these services are based on the use of smart cards that provide subscriber identification and data transmission security.
In trade and banking, smart cards are used as secure credit/debit bank cards. They perform functions similar to those of magnetic stripe cards. But thanks to the built-in computing capabilities, smart cards allow you to perform autonomous operations and verification. Unlike cards with a magnetic stripe, data from a smart card cannot be just as easily copied for use for selfish purposes. Credit cards using smart card technology can prevent fraud cases, due to which banks around the world lose billions of dollars annually.

Recently, there have been new trends in the use of smart cards in trade and banking – electronic money (or electronic wallet). The available amount of electronic money is stored on the card. The balance can be reduced or replenished. The system of electronic payments based on smart cards allows you to reduce the cost of servicing cash turnover. In particular, smart cards provide an ideal mechanism for performing interactive micropayments, since the use of conventional credit cards for payments for small amounts involves significant overhead costs.

In retail, smart cards can be used to organize a collective system of discounts for regular customers in the retail network of partner companies. All these measures contribute to the growth of sales and customer satisfaction. If a customer makes purchases in stores belonging to the partner network, information about this is accumulated on the card. In the future, the cardholder may be entitled to discounts, “air miles” or other gifts. Purchase data is recorded on the card, so sellers also get the opportunity to analyze customer preferences and their purchasing behavior.

Smart cards can replace tokens and tickets on public transport. Motorists can use smart cards to pay for parking and road tolls. In this case, their effect will be similar to prepaid phone cards. Smart card-based solutions promise significant benefits: they allow you to accumulate information about discounts, perform many small operations, as well as conveniently and quickly pay for goods and services.
In the field of healthcare, smart cards make it possible to simplify the accounting of information. The card can store data on medical insurance and record the patient’s medical history. The card can also store information about discounts available to the patient and data for reviewing claims. The patient’s personal medical records can also be stored in the card. This will ensure the relevance and completeness of the information. In addition, it will always be available to specialists, employees of clinics and pharmacies.

When connected to the Internet, smart cards provide reliable user authentication and access control, so their use in this area seems very promising. Smart cards are increasingly being used in public key encryption systems. The smart card stores the secret key of its owner and its digital certificate (digital signature). These two components make it possible to identify the cardholder in the digital world. The public key encryption method provides for a pair of keys: secret, or private, and public. The secret key is known only to its owner, and the public key is known to everyone with whom it exchanges information. Each pair has the following properties: something encrypted by one of them can be decrypted with the help of the other; having one key from the pair, called public, it is impossible to get another, secret. The “secret key – public key” pair provides the generation and verification of a digital signature. The digital certificate is issued by the certification center. It guarantees the authenticity of the public key. Smart cards are widely used for authentication in areas such as controlling access to websites, digitally signing emails and ensuring the security of online transactions. You can imagine many other options for using smart cards on the Internet.
In closed communities, for example in companies or universities, you can also find many models for using universal smart cards. Here are just a few of them: organization of physical access to offices and computer centers, verification of access rights to computer networks, corporate Web sites and servers, storage and processing of administrative data, performing various financial transactions (paying for lunches, purchasing goods from vending machines, receiving cash, etc. replenishment of the account in atms, etc.).
Smart card technology has already been widely recognized, and they are becoming an indispensable attribute of every person.