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Types of Chip Cards
Smart cards are defined according to
How the card data is read and written.
The type of chip implanted within the card and its capabilities.

There is a wide range of options to choose from when designing your system.

Contact Cards
This is the most common type of smart card. Electrical contacts located on the outside of the card connect to a card reader when the card is inserted into the card reader.

Increased levels of processing power, flexibility and memory add cost. Single function cards are often the most cost-effective solution. Choose the right type of smart card for your application by evaluating cost versus functionality and determine your required level of security. All of these variables should be weighted against the expected lifecycle of the card. On average the cards typically comprise only 10 to 15 percent of the total system cost with the infrastructure, issuance, training and advertising making up the other 85 percent. The following chart demonstrates some general rules of thumb;

Card Function Trade-Offs

Memory Cards
Memory cards have no sophisticated processing power and cannot manage files dynamically. All memory cards communicate to readers through synchronous protocols. In all memory cards you read and write to a fixed address on the card. There are three primary types of memory cards.
Straight
Protected ( also called PIN Based Cards)
Stored Value

1. Straight Memory Cards
These cards just store data and have no data processing capabilities. These cards are the lowest cost per bit for user memory. They should be regarded as floppy disks of varying sizes without the lock mechanism. These cards cannot identify themselves to the reader, so your host system has to know what type of card is being inserted into a reader. These cards are easily duplicated and cannot be tracked by on-card identifiers.

2. Protected / Segmented Memory Cards
These cards have built-in logic to control the access to the memory of the card. Sometimes referred to as Intelligent Memory cards, these devices can be set to write protect some or all of the memory array. Some of these cards can be configured to restrict access to both reading and writing. This is usually done through a password or system key. Segmented memory cards can be divided into logical sections for planned multi-functionality. These cards are not easily duplicated but can possibly be impersonated by hackers. An on-card identifier typically can track them.

3. Stored Value Memory Cards
These cards are designed for the specific purpose of storing value or tokens. The cards are either disposable or rechargeable. Most cards of this type incorporate permanent security measures at the point of manufacture. These measures can include password keys and logic that are hard-coded into the chip by the manufacturer. The memory arrays on these devices are set-up as decrements or counters. There is little or no memory left for any other function. For simple applications such as a telephone card the chip has 60 or 12 memory cells, one for each telephone unit. A memory cell is cleared each time a telephone unit is used. Once all the memory units are used, the card becomes useless and is thrown away. This process can be reversed in the case of rechargeable cards.

CPU/MPU Microprocessor Multifunction Cards
These cards have on-card dynamic data processing capabilities. Multifunction smart cards allocate card memory into independent sections or files assigned to a specific function or application. Within the card is a microprocessor or micro controller chip that manages this memory allocation and file access. This type of chip is similar to those found inside all personal computers and when implanted in a smart card, manages data in organized file structures, via a card operating system (COS). Unlike other operating systems, this software controls access to the on-card user memory. This capability permits different and multiple functions and/or different applications to reside on the card, allowing businesses to issue and maintain a diversity of ‘products’ through the card. One example of this is a debit card that also enables building access on a college campus. Multifunction cards benefit issuers by enabling them to market their products and services via state-of-the-art transaction and encryption technology. Specifically, the technology enables secure identification of users and permits information updates without replacement of the installed base of cards, simplifying program changes and reducing costs. For the card user, multifunction means greater convenience and security, and ultimately, consolidation of multiple cards down to a select few that serve many purposes.

There are many configurations of chips in this category including chips that support cryptographic PKI functions with on board math co-processors or Java virtual machine hardware blocks. As a rule of thumb - the more functions the higher the cost.

Contactless Cards
These are smart cards that employ a radio frequency (RFID) between card and reader without physical insertion of the card. Instead the card is passed along the exterior of the reader and read. Types include proximity cards which are implemented as a read-only technology for building access. These cards function with a limited memory and communicate at 125 MHz. True read & write contactless cards were first used in transportation for quick decrementing and re-loading of fare values where their lower security was not an issue. They communicate at 13.56 MHz, and conform to the ISO14443 standard. These cards are often straight memory types. They are also gaining popularity in retail stored value, since they can speed-up transactions and not lower transaction processing revenues (i.e. VISA and Mastercard), like traditional smart cards.

Variations of the ISO14443 specification include A, B, and C, which specify chips from either specific or various manufacturers. A=Philips B=Everybody else and C=Sony chips. Contactless card drawbacks include the limits of cryptographic functions and user memory versus microprocessor cards and the limited distance between card and reader required for operation.

Combination Cards
These are hybrids that employ both contact and contactless technology in one card. Combi-cards can also contain two different types of chips in contrast to a Dual-Interface card where a single chip manages both functions.

Operating Systems
The two primary types of smart card operating systems 1). Fixed File Structure and 2). Dynamic Application System. As with card types, selection of a card OS depends on the application the card is developed for. The other defining difference is in the Encryption Capabilities of the OS and the Chip. These are typically distinguished by Symmetric Key and Public Key. See the security section of this site for more information.

1). Fixed File Structure
This type treats the card as a secure computing and storage device. Files and permissions are set in advance by the issuer. These specific parameters are ideal and economical for a fixed type of card structure and functions that will not change in the near future. An example of this kind of card is a low-cost employee multi-function badge.

2). Dynamic Application System
This type of operating system, which includes the MULTOS and JAVA card varieties, enables developers to build, test, and deploy different applications securely. Because the OS and applications are more separate, updates can easily and repeatedly be made. See our software page for more information. An example card is a SIM card for mobile GSM where updates and security are downloaded to the phone and dynamically changed.

Glossary of Terms used in Loyalty Card

What is

ABS
Acrylonitrile butadiene styrene, plastic material formed through injection molding, used for some smart cards.

Access Control Card
Magnetic or chip cards with or without photo used to enter restricted areas eg. ID badges.

Blank Cards
Cards with no printing usually used in imagining machines

Chip
A piece of silicon etched with an electronic circuit.

Coercivity
A measure of the strength of a magnetic field. Fields are expressed as low or high by the terms LoCo and HiCo.

Combi-card
Holding both contact and contactless technology on one card.

Contact
A point of electrical connection between a smart card and its external interface device.

Contact Card
Any card where information is transferred to a reader via a series of contact points located on the card.

Contactless Card
Smart card which transfers data using radio frequency technology via a transmitter and receiver.

Degaussing
Magnetic stripe data erasure.

Digitizing
Conversion of non-textual data to digital form.

EMV
A standard or specification endorsed by Mastercard or Visa.

Electronic Purse
Smart card stored value program.

Embossing
Characters in relief on the front surface of a card.

Encoding
Recording electronic information on to a magnetic stripe.

Encryption
Transferring information based on a key to make it un-intelligible to unauthorized parties.

Financial Hologram Card
Financial cards using a hologram, 30 mil thickness, ISO cards, MasterCards/Visa and others.

Financial Other
Usually Debit, Check, Charge or ATM cards not using a hologram.

GSM
Global System for Mobile Communication, a widely used digital mobile phone standard.

Gift Card
A retail prepaid card usually initiated at cash or checkout.

Hologram
A flat optical image which looks three-dimensional to the naked eye.

Holographic foil
the foil used to carry embossed holographic images.

Initialization
Programming a smart card chip with data that is the same for a batch of cards.

ID Card
Card which identifies both the bearer and the issuer. All financial transaction cards are ID cards.

ISO
International Standards Organization, central body for formation and dissemination of industry standards for all national standards bodies.

Issuer
An individual or organization that issues identification cards to individual or corporate cardholders.

Lithography or Offset Printing
Most common process for plastic card printing based on the concept that oil and water are not compatible. The ink represents the oil and the alkaline fountain solution represents the water. These are the two main components which must interact during the printing process, allowing the ink to adhere to the image area of a printing plate while the fountain solution repels the ink from the non-image area.

Lamination
Using plates on a press to fuse the various layers of a plastic card together.

Loyalty Card
Usually a retail frequent user card offering promotional benefits.

Magnetic Stripe
The strip of magnetic recording material on an ID card.

Membership Card
Usually a club member card for ID purpose.

Multi-application Card
Smart card that can handle a variety of applications.

Non-magnetic Card
Cards without a magnetic stripe eg. ID cards.

Oersted
The unit of magnetic coercive force used to define difficult of erasure of magnetic material.

Off-line
A transaction via paper or reader not connected to a central system.

On-line
A transaction on a terminal permanently connected to a network that is on-line to the card account.

Optical Card
Card with information recorded on an optical memory stripe, similar to compact disks.

Other Secure Card
Usually Retail , Oil/Gas, Telecom, Transit, Pay TV cards.

Pay TV Card
Usually a chip card subscribing to a television service eg. satellite TV.

Personalization
Printing, encoding and programming a card with data specific to an individual cardholder.

Prepaid Card
A card paid for at point of sale permitting the holder to buy goods and services up to the prepaid value.

Promotional Card
A card offering special benefits to users eg, discount card.

Proximity Card
A contactless card whose presence and data can be sensed by an interface device not in physical contact with the card.

PVC
Polyvinyl chloride, the most widely used plastic material for ID cards.

Radio Frequency Card (RFID)
A proximity card in which the coupling between the card and the interface device is by radio.

Secure Card
Cards with an intrinsic value. eg. financial, other secure etc.

Screen Printing
Method in which ink is forced through a design-bearing screen made of silk or other material onto the substrate being printed.

Signature Panel
The area of an ID card where the cardholder enters a signature.

SIM
Subscriber Identification Module: the smart card necessary for the operation of GSM phones.

Skimming
Copying the magnetic stripe encoding from one card to another.

Smart Card (aka Chip Card, IC Card)
A plastic credit card sized card that contains one or more semiconductor chips. In the capability category, there are three types:

Memory Card
smart card that stores and retrieves serial “streams” of data that are sent to or received from the semiconductor chip.

Protected Memory Card
smart card that requires a secret code or PIN number to be entered before the data can be sent to or received from the semiconductor chip.

Microprocessor Card
contains a microprocessor chip with a microcode that defines a command structure, a data file structure and a security structure in the card.

SET
Secure Electronic Transaction, a MasterCard/Visa backed standard to allow safe Internet trading via encryption certification of all parties involved in a transaction.

Stored Value Card (aka cash card, electronic purse, prepaid card)
A financial card that is loaded with a certain amount of money with each purchase amount deducted from the card.

Substrate
Material upon which a plastic card is printed.

Transit Card
Magnetic or chip card used for transportation services eg. subway card.

Telecom Card
Magnetic or chip card used for telephone services eg. GSM card, prepaid card.

Traditional Card
A magnetic or non magnetic card not using chip card technology.

UV Printing
UV printing is used to print on plastic, foil, and specialty substrates. UV light is used to dry specially formulated inks that are printed on non-porous materials. In conventional printing, ink dries as it is absorbed into paper. Because plastic is not absorbent, the ink must be dried on the top surface using UV light.

Weigand Wire
Magnetic media embedded in cards for access control applications.

Disadvantage For Companies Offering Loyalty Cards

Disadvantage For Companies Offering Loyalty Cards.

High Cost of Promotion and Implementation
Effort / human resources possibly removed from other marketing projects
Difficult to Get Out of such schemes (once in always in, well at least for a long time)
If Scale, Customer Benefits and Other Requirements are Not Achieved Then Scheme May Be an Expensive failure.
It May Hide Real Loyalty and Satisfaction Levels (eg. switching may take place following retrieval of minimum accumulated rewards). Ie. Disloyalty may be delayed rather than avoided.
Customer Information May Be Partial and Misleading
Do not Loose Profits to Bonuses and Rewards (What is the real cost/benefit)
Risk of falling foul of Consumer Privacy ACT

Benefits For Companies That Offer Loyalty card Schemes

Identification of Customers (enabling deeper relationship marketing)
Reason for More Contact with Customer
Identification of Customer Behavior – who buys what, when, where how much, how, etc. + Identification of Trends.
Customer Tie-In
Increased Sales Volume / Turnover
Damage to Competitors (if successful and especially if rewards based on minimum requirements, e.g. air miles)
Cross Marketing Opportunities (eg. Financial Services)
Customer Satisfaction
Word of Mouth if it is a good deal
Differentiation / More Appropriate To Those Who Want It
May Hide Real Prices & Therefore Enable Higher Prices
Perhaps New Customers
Possibility To Sell Customer Data (in certain circumstances)

Benefits For Customers using Loyalty card

Saving Money / Make Money
Convenience Factor – Ease of Payment (Speed and Simplicity)
Special Offers / Discounts for Card Holders
Feeling Of Belonging and Membership
Possibility of Receiving other Financial Services
Member Magazines etc

More...

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