SMART CARDS: THE TECHNOLOGY, ITS ADOPTION, COMPETITION IN MARKETING SMART CARDS, AND SECURITY
This research examines smart card technology, the adoption smart card technology by transaction card issuers in the United States, competitive strategies in the marketing of smart cards, and security issues involving the use of smart cards. One focus of this research is on the adoption of smart card technology in the United States, as opposed to the introduction of the technology, because the introduction of smart card technology in the United States occurred several years ago. The acceptance of smart cards by consumers and businesses in the United States, however, has been a slow process. The widespread use and general acceptance of smart cards in Europe contrast sharply with the situation in the United States (Hansell, 2001).
Several types of digital money have been developed or proposed. The digital money types including the following:
Icons (electronic tokens) stored on a computer's hard drive and transmitted over the Internet using a modem and special software
Monetary value loaded onto smart cards with embedded microprocessors for recording transactions and calculating changes in value, and
Hybrid versions that allow digital money to be uploaded from smart cards to a personal computer or downloaded from the computer to a smart card for greater portability (Coates & Bonorris, 1998).
The so-called smart cards ù the fourth and fifth generation credit cards ù likely are the wave of the future. These cards have computer chips that contain a vast array of information about the cardholder and her or his finances. The drawback to these cards is acquisition cost for the issuer. The major smart card technology is the Mondex card developed in the United Kingdom.
Drexler Technology Corp. unveiled a data storage product ù a multi-function chip/optical smart card ù in Paris in 1994. The multi-function, combined-techno...