Smart cards could give notes and coins a run for their money
FOR those who flinch from carrying cash, the introduction of smart cardsplastic cards with electronic chips embedded in thempromises to change banking, telecom and, in short, everyday living. No more will people have to haggle over change or soiled notes since smart cards promise to replace currency notes and coins to a great extent.
After taking over as the minister of state for finance, Satpal Maharaj announced earlier last month that cash cards would be shortly introduced to get over the shortage of currency notes. Needless to say, smart card vendors are seeing the cash behind the cards. Already, the Reserve Bank of India (RBI), State Bank of India (SBI) and Canara Bank are working on a pilot project at IIT Mumbai to see if the institute can be turned into a cashless campus. Companies like Schlumberger, Aplab, Gemplus and VeriFone are providing the technology for the entire exercise which involves nearly 15,000 users.
Sanjaya Sood, managing director, Schlumberger Measurement and Systems, says that by the turn of the century, the telecom sector would have a market of anything between 5-10 million cards, another one million cards for payphone cards and if the government decides to go ahead with introducing electronic banking, an estimated five million more cards are waiting to be lapped up. Since the growth promises to be so exciting, these figures could end up being conservative estimates.
What is a smart card? It is a credit card size plastic card embedded with an IC chip. Compared to any of the cards in the market today, this offers the highest security and data storage capacity. In fact, because of its capacity to store data, it can be compared to a computer floppy. The most common example of a smart card is a prepaid telephone calling card. If required, the data stored in the card can be protected with a personal identification number (PIN).
What are its uses? To begin with, pre-paid calling cards should make it very convenient for persons to walk into any unmanned public telephone booth, insert their smart card and talk for as long as they like, or as long as the value of the card is not exhausted. Of course, once the value is exhausted, a new one has to be acquired. However, the cash card issued by banks will be a reusable card. From the ticket counter of a local train in Mumbai to payphones to shopping for everyday needs to storing data, the smart card will help you with electronic cash for every occasion. The key, of course, is that each transaction becomes faster. Schlumbergers Sood said his company is negotiating with basic service operators for providing smart card-based payphones. And of course, the smart card technology is cellular-compatible.
How secure are smart cards? For starters,
a smart card just cannot be duplicated. Depending on how secure you want it to be, you can encrypt the data. However, if a prepaid calling card is lost, it can be used by anyone. Since a variety of data can be stored, some of it can be protected by a PIN while the rest can be read by anyone. More sophisticated cards can have more than one PIN for different sections. As a rule, all smart cards with banking applications are PIN-protected since they involve the handling of money. When a smart card and reading terminal need to exchange confidential information over a telephone line, they first ensure that the other is a genuine card or terminal. Only after the authentication procedurewhich takes place in less than a secondis complete is the transaction initiated.
How easy are they to use? Even easier than a credit card since it does not require that transactions over a certain amount be authenticated from the credit card company. Unlike a credit card, no signatures are required at the end of the transaction since you will have used your PIN, if required.
And while these cards still need a contact for them to function, in the near future, there will be the "contactless card": walk past a telephone and it knows youre in office so that all your calls will be diverted to the office. However, for these smarter cards, patience will have to be the virtue.