Smart card - new life style
The information with mobility of services is the lifestyle of the future, the dawn of which is being observed today. Card is now playing a vital role in our daily lives, may it be a credit card, prepaid card for internet, mobile or payphone, ATM card, loyalty card, national identity card, public transport ticket card or driving license. It has developed a unique relationship of faith between the individual and businesses, the buyer and seller, the service provider and the user. The simple printed card is now transformed into smart cards, which can store readable information. This information can be read by the instrument of the service provider for provision of required service or downloaded onto the computer for further processing. There are two types of cards from the technological viewpoint, the memory card and integrated circuit (IC) cards. The standard distinction between the two is:

- Memory cards store data up to 2 Kb. Data can be rewritten. These cards use static authentication. They can only handle simple transactions such as counting phone call units, the typical example are payphone cards, credit cards etc.

- Integrated circuit (IC) chip cards combine a central processing unit (CPU) with various types of memory such as fixed programme memory (ROM), non-volatile data memory (EEPROM) and volatile data memory (RAM). Their memory capacity is in the range of 1-32 KB, while clock rates range from 4-16 MHz. IC chips can use dynamic authentication and can be programmed to handle sophisticated applications.

Memory chips represent the bulk of the smart card market. However, the future lies with IC chips. Another important technological distinction is between contact and contact-less cards. Most cards in use today are contact cards. However, there is a strong interest in contact-less technology for applications where mobility is important, particularly in transportation whether for mass transit ticketing or for road toll. Smart card does not work in isolation. It is an integral part of an application, which puts to use its functionality. Such application requires not only the availability of cards but also an extensive infrastructure of readers and terminals, which are part of an overall system and/or network architecture. It is the system design that determines the market success (or failure) of a given smart card application.

These functions can be combined and enhanced in many different ways. As a result, cards are deployed and used in an ever growing variety of uses and applications including telecommunications, pay TV, finance, transport, health care, retailing, internet access, etc. In turn, this variety implies a diversity of technological and business approaches.

In the early days of the smart card, financial applications were thought to be the main growth vector. So far, however, they failed to fulfil this expectation. Today, they represent a small share, estimated to be somewhere between 4 and 6 per cent, of the total market. While this share is increasing, the main growth impetus comes largely from other sectors, in particular from telecommunications. The table below, based on data from card manufacturers, shows the evolution of the smart card market and its various sectors between 1995 and 2000.

The table above reflects that the usage of smart card is growing at a tremendous growth rate of 30 per cent per annum.

The smart card applications can be broadly categorised into two groups:

(i) the commercial applications, and

(ii) social and public administration applications.

The commercial applications include telecommunication, transport, financial application (electronic purse), credit and debit card, loyalty cards etc. The social sector smart card applications include personal identification, driving license, healthcare, and electronic benefit transfer.

Among the commercial applications the telecommunication sector is the largest user of smart cards in the world today and is likely to remain so in the foreseeable future. Telecommunications 'bracket' the range of applications tangibly demonstrate the versatility of the card as well as its systemic character. The major applications in this sector are payphone service and GSM mobile phone service, the earlier using prepaid card, an elementary memory card in rather simple application environment and the later using microprocessor-based subscriber identity module (SIM) card, which is integrated within a highly sophisticated digital mobile telephone network, GSM. Smart card is an integral part of GSM design. Network can be only accessed through a SIM card. The network access function, which is integral to a fixed line terminal, is now externalised and transferred onto a card. SIM card can be used with any GSM terminal as long as the card is valid. It is the card not the terminal that determines the telephone number and parameters of use. The advent of m-commerce and its growing role in business and financial transactions is expected to give a tremendous boost to smart card applications in telecommunication sector.

The notion of replacement of physical cash by electronic purse (EP), based on the smart-card technology, has generated considerable interest among financial institutions all over the world, particularly in Europe. In case of financial applications, cards actually store monetary value, which could be used as a substitute for cash and scriptural money. As all stored value cards, a monetary value card is prepaid by the customer, who either pays for it with cash or transfers money from his/or her bank account, before he can use it. The potential benefits to a merchant include reducing theft and vandalism and accelerating payment procedures and thus potentially increasing sales. Potential benefits to customers include: speed at point of transaction, convenience and ease of use (especially for daily routine transactions where exact cash is needed), reduced bulk and an increased sense of security. VISA Cash from USA, Mondex from UK, Proton card from Belgium and ZKA/Geldkarte from Germany have launched the major EP schemes. However, the relationship between the financial sector and the smart card has been rather difficult and, all in all, rather disappointing. So far, financial applications have represented a small share of total smart cards, fewer than 5 per cent in 1995 owing to reservations of financial institutions regarding security concerns, cost of infrastructure and regulatory matters.

Debit card is a more recent product than the traditional credit cards. They have been developing rapidly, particularly in Europe, where they represent the majority of cards. Debit cards require sophisticated infrastructure and elaborate security arrangements. To the extent that debit card allows direct access to the banking network, risks of fraud, in case of a counterfeit card and/or fraudulent entry, are considerable. To limit these risks, financial institutions introduce elaborate security precautions such as PIN numbers and on-line authorisation systems.

Smart card-based ticketing systems in public transport sector have been already successfully deployed on a large-scale, with Asian countries playing a leading role. The market potential is huge, with some 20 billion-commuter transactions per year. According to Phoenix Planning & Evaluation Ltd. from Rockville, Maryland, the number of transportation smart card world-wide will increase from 16 million in 1996 to 200 million in 2000.

In the social and public administration sector smart card, in synchronisation with e-government concept, is now playing an important role for the welfare of the common man. Health-care card carries complete medical record of a patient. The data can be updated with every new ailment happening, which will now be accessible by any health institution under international standards. Personal identification smart cards will have all personal record including blood group, change of family status. The card may be used as passports in future having all international travelling details and with the possibility of even electronic visa issue in future. The driving license cards with small memory chip on it will have driving license related personal data including accidents occurred and number of tickets issued. All of this data of these cards could be shown on the computer screen as well. Governments are now moving to issue Electronic Benefits Transfer cards dealing with social security payments; retirement benefits and salary transfer from government treasury to personal accounts.

The widespread of smart card applications in various spheres of life is not only causing the wallets getting heavier, which are now be filled with cards instead of currency notes, but also creating confusion to manage the cards including remembering pin numbers and security codes separately for each of the card. This issue is giving birth to the idea of issuance of multi-application cards. However, it has to cross certain barriers, which includes:

- Increased risk for the customer in case of loss of card.

- Who owns the card and applications?

- Who issues the cards, owns and updates customer information and owns application keys?

- Who performs application verification and authenticity?

- Who pays for the infrastructure?

- Who controls real estate on the card and chip?

- Who is liable for lost stolen or malfunctioning cards?

- Who gets the various revenue streams?

The smart card applications are visibly growing in Pakistan, mainly in commercial sector including GSM mobile phone SIM, credit card, loyalty card and now debit card. However, the real growth in financial and commercial applications is only possible, when the old age banking system is modernised. On the social and public administration side it is to be seen when the government realises the need of use of such technologies for the welfare of the common man and for efficient public administration.

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