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What Is A Smart Card & How Is It Used?

October 21, 2021
Smart cards are currently the most common IT processing power, with an estimated 30-50 billion of them in circulation. According to the recent report of Markets and Markets, the market value of smart cards will reach $21.57 billion by 2023. Every sector, whether large or small, is influenced by smart cards. These cards provide security, confidentiality, portability, and convenience.

The most common applications of smart cards include contactless payment cards, employee ID badges, medical records cards, transit cards, health ID cards, etc. This article will discuss what smart cards are, the different types of smart cards, how they work, and their uses.


What is a smart card?

A smart card is a physical plastic card containing an embedded integrated chip acting as a security token. The chip can be an embedded microcontroller or a memory chip. Smart cards with an embedded microcontroller have the distinct ability to store data, carry out on-card functions, like encryption and mutual authentication, and interact with a smart card reader. In addition, they are tamper-resistant and protect in-memory information using encryption. So, they are robust and secure, ideal for everyday use.

How Do Smart Cards Work?

A smart card needs a card reader to work correctly; it cannot function in isolation. Smart cards contain a chip consisting of a contact pad, which makes electronic interaction between itself and the card reader possible.

The working process of a smart card is comprised of the following steps:

  1. First, the smart card makes contact with the card reader, either directly or indirectly.
  2. The smart card reader receives the information stored on the chip.
  3. This information is sent to the controlling terminal for immediate processing.

The chip exchanges data with card readers through a serial interface either through direct physical contact or via short-range wireless connectivity standards like RFID or NFC.

Advantages of Smart Cards

The main advantages of smart cards are:

  • High levels of security
  • Larger memory
  • Prevents fraud
  • Reliability
  • Information Security
  • Privacy
  • Ease of use
  • Reduced cost for operators and users

Types of Smart Cards

The categorization of smart cards depends on various factors, like the way the card reads and writes data, the type of embedded chip, and the chip's capabilities. The various types of smart cards are:

Contact Smart Cards

Contact smart cards are the most common smart cards. These cards require physical contact with the card reader. These cards are inserted into the card reader, which reads the information stored on the contact plate and carries out the required transaction. The most common examples of contact smart cards are credit cards, ATM cards, and SIM cards.

Contactless Smart Cards

As the name suggests, these cards do not need physical contact with an interface to make any transaction. They only need to be close to a card reader to be read; there is no need for direct contact. These cards use radio frequencies or Near Field Communication (NFC) technology to establish a wireless connection. These cards provide hygienic benefits as there it removes the risk of the transference of bacteria, viruses and infection. As a result, the use of contactless smart cards has risen due to the COVID-19 pandemic. A typical example of this type of card is prepaid contactless travel cards used on buses and trains.

Contactless Smart Cards

Hybrid Smart Cards

These cards are a combination of both the cards mentioned above. They can work as contact smart cards as well as contactless smart cards depending upon the occasion. They have two technologies embedded in them, and each interface connects to different chips with independent modules.

Memory Smart Cards

These cards can store, read and write data to the chip. The data can be overwritten but can't be modified programmatically as the card is not programmable. These cards have limited usage because of low memory capacities. They are not robust and are used in disposable or single-use products. These cards are of three types - straight memory cards, protected memory cards, and stored value memory cards.

Microprocessor Smart Cards

These cards have a microprocessor embedded into the chip to provide dynamic data processing capabilities. The microprocessor can add, delete, and edit the existing card data. A smart card operating system manages the data and the memory allocation. These cards store a large amount of data due to larger memory spaces.

Dual-interface Smart Cards

Similar to hybrid smart cards, these cards also have both contact and contactless options. However, unlike hybrid smart cards, they have only one chip controlling the communication interfaces.

How Can A Smart Card Be Used

Smart cards are used to deliver quick and secure transactions as well as protect personal information. The common uses of smart cards in various industries are as follows:


One of the most common uses of smart cards is payment cards like credit cards and debit cards. Most of these cards are "chip and PIN" cards that require a PIN, while others are "chip and signature" cards that require customer signature for verification. In addition, these cards can be used as "electronic wallets" where you can fill the chip with funds for small purchases like taxi rides, groceries, etc. Smart cards provide the ideal solution for e-commerce transactions as they offer better protection and confidentiality than other financial systems.


Rapidly increasing healthcare data poses a challenge to maintain the efficiency of patient care - with some healthcare systems still relying heavily on paper-based data collection and transference.  Smart cards address these challenges by providing secure storage and instant access to a patient's medical history. Embedded smart cards provide safe and secure delivery of medical equipment like dialysis machines, blood analyzers, and laser eye surgery equipment. They also help reduce healthcare fraud, facilitate compliance with government initiatives like organ donation, and decrease record maintenance costs.

Check out our article ​​Anti-Counterfeit & Authenticity Solutions Using Printed Electronics.


Subscriber Identity Molecules (SIM) cards used in mobile phones are reduced-size smart cards. The SIM card utilizes a unique identifier to manage the privileges of each subscriber to identify and bill them correctly. The security provided by SIM cards also prevents wireless providers from fraud.

ID Verification & Access Control

Various business offices and universities use smart cards to verify identity. They can offer a tamper-proof solution for companies requiring security demands to store information, like fingerprints. Many U.S. government facilities use contactless readers for access.

Information Technology

Smart cards can be used as a security token and store certificates for secure web browsing. They enable secure login, authentication of users, storage of digital certificates, credentials, passwords, and sensitive data encryption. These cards make information readily available while maintaining the privacy of individuals and keeping their information secure from unwanted intrusions.

Educational Institutes

Many schools and colleges also use smart cards for student attendance, tracking books at the library, access to restricted facilities, and transportation services. Students can also use them for payment at canteens, vending machines, etc. This technology also helps reduce the admin burden on staff, free up teaching time, and provide real-time data on student location and behaviour. 

Ynvisible’s Clients using Smart Cards

Apart from these industries, some of our clients are also using smart cards integrated with our electrochromic display technology.

  • SpotSee and Ynvisible created a TempSafe Electrocard, a low-power temperature measuring label for cold-chain and temperature-controlled shipment like blood bags, biomaterials, etc.

  • ALMAX and Ynvisible collaborated to produce a temperature threshold indication tag to provide custom Human Machine Interface (HMI) solutions.

Human Machine Interface

  • Ynvisible is working with strategic partners to develop anti-counterfeiting technologies to verify goods across the entire supply chain to prevent counterfeiting activities.

segment display kit

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