# What's so "smart" about my credit card?
**URL:** https://boards.straightdope.com/t/whats-so-smart-about-my-credit-card/78423
**Category:** Factual Questions
**Created:** [August 27, 2001, 10:43pm UTC](https://boards.straightdope.com/t/whats-so-smart-about-my-credit-card/78423 "2001-08-27T22:43:19Z")
**Posts on this page:** 9
**Page:** 1
### Author:  [@Jophiel](https://boards.straightdope.com/u/Jophiel)
#### Post date: [August 27, 2001, 10:43pm UTC](https://boards.straightdope.com/t/whats-so-smart-about-my-credit-card/78423/1 "2001-08-27T22:43:19Z")
Another ad in the mail today. I can get some credit card by XYZ Bank that’s not only a credit card, it also has some “smart chip” in it! Technology knows no limits. Here’s the catch though, nowhere in the literature does it mention exactly why I’d want a smart chip, what it does or how it’s going to improve my credit card. If fact, I’ve noticed this about the TV ads for “smart cards”, print ads, radio ads… they all make a big show of saying how this card is the wave of the future, but no one can tell me what it does besides giving me a line of credit with which to purchase things. You know, like the cards I have now.
Anyone have the answers?
---
### Author:  [@Smeghead](https://boards.straightdope.com/u/Smeghead)
#### Post date: [August 27, 2001, 11:27pm UTC](https://boards.straightdope.com/t/whats-so-smart-about-my-credit-card/78423/2 "2001-08-27T23:27:38Z")
I’ve been wondering this too. Well? Anyone??
---
### Author:  [@yabob](https://boards.straightdope.com/u/yabob)
#### Post date: [August 28, 2001, 12:14am UTC](https://boards.straightdope.com/t/whats-so-smart-about-my-credit-card/78423/3 "2001-08-28T00:14:06Z")
You can get a “smart chip” reader for your PC, to provide “added security” for online shopping. It sounds like it provides a built-in encryption key for credit card based transactions on the internet. I would imagine that it’s a lot like using a “secure card” for getting behind your corporate firewall from the outside, if you’ve ever had to use one of those things.
Beyond that, it’s actually putting a little OS on your card, with the capability of adding applications. Here’s a press blurb on American Expresses “Code Blue” contest:
[http://www.smartcardcentral.com/news/pressrelease/may2001/amex\_052301.asp](http://www.smartcardcentral.com/news/pressrelease/may2001/amex_052301.asp)
Right now, I think it’s potential more than anything else. The winner was some guy who turned the card into a secured set of internet bookmarks with ID’s and passwords and so on.
> [@](#):
>
> In addition to Mr. Fisher, Sirl Davis of the United Kingdom will receive $25,000 as the second place finisher in the Code Blue contest. Mr. Davis’ application would use smart card technology for encrypting and gaining secure access to MP3 files – which can carry news, book readings and music – and could be extended to other file formats, software, and video games. Awards of $15,000 each will go to two third-place finishers – Andy Dudek of Canada and Thomas Herrmann of Germany. Mr. Dudek created a Java Card technology application for multiple functions including couponing, while Mr. Herrmann would use the smart card technology for electronic ticketing and gaining access to shows and events.
I don’t know what I think of it right now. It would be kind of nice to use it for tickets and so on, but you just KNOW that the demographic tracking and ad-targetting applications are already in the works.
And it needs to be integrated with your PDA / cell phone, obviously. Yet another wrinkle for handheld devices.
---
### Author:  [@Jophiel](https://boards.straightdope.com/u/Jophiel)
#### Post date: [August 28, 2001, 12:56am UTC](https://boards.straightdope.com/t/whats-so-smart-about-my-credit-card/78423/4 "2001-08-28T00:56:58Z")
Does that mean that the chip part is writable? After all, secure bookmarks tailored to myself aren’t useful unless I have some method of adding the bookmarks in. If the bookmarks are being added and stored at the XYZ Bank server and are asked for by the merchant when conducting a transaction I don’t very well need a chip, just for the server to notice when my number is being run through. Actually, that goes for about anything; unless the chip is writable and customizable by myself, what possible purpose can it serve by being on the card that isn’t better served by leaving the info on the servers that have to be accessed anyway when determining if my line of credit is any good?
I don’t understand the “smart chip reader” idea. Am I reading my own smart chip while shopping online by running my card through something? Why would I need more security when I’m using my own card? Again, it sounds like something better left to the existing hardware than tossing some chip of dubious worth onto a piece of plastic.
I’m not attacking you, Yabob (and thank you for providing the link) – I guess I’m just getting grumpy that I’m expected to want a credit card simply because it has a gizmo on it that apparently has no real function. Perhaps it might one day have a function, but at that time I don’t know if the function will be attainable by the smart chip I have now and why I couldn’t simply get a card later when the companies have figured out why in the hell they’re putting this thing on there. It’s like buying a car with a lever in the dashboard: “We don’t really have a use for that lever, but you’ll want to buy this car now in case we ever think of something that lever might do.”
---
### Author:  [@fecal\_nugget](https://boards.straightdope.com/u/fecal_nugget)
#### Post date: [August 28, 2001, 1:08am UTC](https://boards.straightdope.com/t/whats-so-smart-about-my-credit-card/78423/5 "2001-08-28T01:08:03Z")
> [@](#):
>
> \*Originally posted by Jophiel \*
> I don’t understand the “smart chip reader” idea. Am I reading my own smart chip while shopping online by running my card through something?
not running through, in the 21st century we just [plug it in](http://www.devdepot.com/description.html?pcode=HOOK3). 🙂
---
### Author:  [@postcards](https://boards.straightdope.com/u/postcards)
#### Post date: [August 28, 2001, 1:34am UTC](https://boards.straightdope.com/t/whats-so-smart-about-my-credit-card/78423/6 "2001-08-28T01:34:17Z")
The deal with the ‘smart card’ was originally for the card to be used as electronic cash. You’d load up your card with X number of dollars and a reader at the place of purchase would deduct the amout of said purchase.
Of course, fast phone connections make it rather useless, as deit cards work just as well.
---
### Author:  [@buh-buh-buh-BACON](https://boards.straightdope.com/u/buh-buh-buh-BACON)
#### Post date: [August 28, 2001, 3:07am UTC](https://boards.straightdope.com/t/whats-so-smart-about-my-credit-card/78423/7 "2001-08-28T03:07:59Z")
Finally, a subject I can contribute to. As mentioned above, the chip can be used for multiple purposes, such as storing passwords, bookmarks, or whatever. It can also be a stored value card. It can be an ID card, for work or school. It can also provide greater encryption capabilities. The really great thing about it, though, is that it can be all of these things at once. the chips can be partitioned with several different functions, all depending on what the issuer wants to provide, and how much they want to spend per card. As was also mentioned, though, they can be used to track your spending habits more closely, and are used by some issuers to custom-tailor loyalty programs. Also, while they haven’t really caught on over in the states, they are in much greater use in Europe. So, it’s not a matter of creating something and not having a use for it, it’s just a function not fully exploited in this part of the world.
---
### Author:  [@douglips](https://boards.straightdope.com/u/douglips)
#### Post date: [August 28, 2001, 5:32am UTC](https://boards.straightdope.com/t/whats-so-smart-about-my-credit-card/78423/8 "2001-08-28T05:32:37Z")
This was [recently discussed](http://slashdot.org/askslashdot/01/08/26/2011201.shtml) on Slashdot. Some excerpts from allegedly clueful comments:
> [@](#):
>
> The use of chip cards has tremendous potential in both the face-to-face (traditional, i.e. at the grocery store) and card-not-present
> (CNP, i.e. Internet) purchase mediums. For example, one day there may be a client-side and server-side standard that enables card
> authentication over the Internet, giving e-commerce retailers greater confidence that the person on the other end is the legitimate
> cardholder and not someone typing in stolen cardholder information. There are also a number of other proposals to use the chip for
> CRM purposes, such as electronic couponing and loyalty schemes. The potential is certainly there to greatly improve the way credit
> cards are used for payments today.
>
> ```
> Despite this potential, even the card companies don’t know what to do with the chips on these cards. There is a total lack of
> standards among the card associations (Visa, MC, Amex, Discover and other foreign schemes). To date, none of them have
> proposed any type of beneficial use for these embedded chips. The card associations love to use catch slogans like “The card with
> a brain”, but mysteriously offer no explanation as to how this brain can help you.
>
> ```
>
> …
> Various reports have estimated a cost between $10 and $20 billion dollars to
> convert the current US card authorizations systems to include chip-based authentication/authorization – a cost that card issuers,
> acquirers (the banks that merchants interface with) and merchants are not ready to eat. In addition, extending chip card authorization
> to the online world will require client-side hardware (i.e. card readers) and server-side software….more hassle than the card issuers
> are ready to deal with right now.
>
> ```
> In a nutshell, your credit card may have a brain, but it is yet to have a place to use all that intelligence.
>
> ```
> [@](#):
>
> These use ISO7416 part 4 T=0 (character asynchronous mode) and T=1 (block asynchronous mode) communications.
> They’re real computer devices in their own right, typically with either an 8051 or Hitachi H8 8-bit microcontroller as a brain and
> a surprising amount of memory - several Kbytes of RAM and up to 64Kbytes of flash or EEPROM storage - pretty
> impressive for a chip that’s 2x3mm, I think.
>
> ```
> T=0 is a simple, half-duplex, master-clocked serial protocol - you could _almost_ use a regular UART to talk to the card,
> except the card's initial message (its ATR - Answer To Reset) is sent synchronously, and the UARTS in regular PCs don't
> have a raw/USART mode that would allow them to receive this correctly. The actual communication speed varies between
> cards (the card tells the terminal how fast it can go in its ATR), but its generally very slow, around 300baud max. T=1 is just a
> simple packet format layed on T=0. Both T=0 and T=1 are, IMHO, rather crappy protocols.
>
> True smartcards aren't just dumb memory devices - they run actual programs, and often have built in special functions,
> generally cryptography stuff (GemPlus makes DES and RSA enabled cards).
>
> ```
---
### Author:  [@Hail\_Ants](https://boards.straightdope.com/u/Hail_Ants)
#### Post date: [August 28, 2001, 8:03am UTC](https://boards.straightdope.com/t/whats-so-smart-about-my-credit-card/78423/9 "2001-08-28T08:03:09Z")
Those chips on smartcards are actually full-fledged computers with memory, a CPU, and I/O functionality. This is why it’s hard to just say what they will do. Trying to say [exactly] what they will be used for was like trying to predict what PCs would be used for 25 years ago. They will be used for countless (and very different) things.
Right now their biggest use (in the U.S. anyway) is as access cards in satellite TV receivers. In Europe they’ve been around for a decade or so mostly as prepaid phone cards.
Understand, I don’t mean that you’ll be putting your new Visa card into your satellite box (though, someday, you probably will). They’re both ‘smartcards’ in that they have a smartchip on them, but are programmed to do totally different things.