Posted by: Adam McCann

Most new credit cards issued nowadays are smart cards, as issuers are transitioning over to them. Europe started using smart credit cards in the 1990s, but the United States didn’t really start the move until 2014.

But smart credit cards can get a lot more complex than EMV technology. Some credit cards allow you to pay wirelessly with RFID technology. And there’s a new generation of smart cards that allow you program multiple cards into one using a Bluetooth connection with your phone. Your phone could even be considered a smart card if you use mobile wallet apps like Apple Pay, since it saves your credit card information to its memory.

It’s also useful to note that there are many other kinds of smart cards. They can be debit cards, rewards cards, personal identification and cards for many other functions. But credit cards are where the technology is most prominent and most advanced.

How Smart Credit Cards Work

Unlike older plastic and metal cards, which only have a magnetic stripe on the outside for a payment terminal to read, smart credit cards use computer chips. This allows them to encrypt their own information and interact with more types of readers than a normal magnetic stripe card. They can also perform multiple functions – both acting as an ID and storing funds, for example.

There are several different ways to use smart cards:

• EMV chip: This is the chip you’ll likely see on the left side of your credit card. You insert this chip into a reader, then either provide a signature or PIN for two-step verification, if required. This lends an extra layer of security to all your transactions.
• RF technology: Some credit cards allow you to make “contactless” payments, whereby information is transferred from the card to a reader without any kind of swipe or insertion. They transmit the info over a short-distance radio frequency, which is what “RF” stands for. One prominent credit card with this technology built in is Capital One Savor.
• Bluetooth: Bluetooth is another type of radio frequency. It’s used by the new generation of smart cards like Fuze, which allow you to program all your cards’ information into one device. Learn more about Bluetooth credit cards.

Other Types of Smart Cards

Many people are only familiar with smart cards when it comes to credit and debit cards. But there are so many other varieties. Smart cards have almost limitless applications.

Here are some major types of smart cards:

• ID: Ever been given an ID card for work or school that lets you into a building by inserting a chip or tapping a reader? That’s a smart card, too. Some countries even incorporate smart technology into their government-issued IDs.
• Transportation: Many metro and bus systems use smart cards to both process payments and give riders points on their purchases.
• SIM: Believe it or not, the SIM card in your phone actually counts as a smart card. It’s a plastic card with a microprocessor that communicates wirelessly.
• Healthcare: Medical institutions may use smart cards as a way of storing patient medical records, in order to increase how secure the information is.

History of Smart Credit Cards

The history of credit cards dates back to the early 20th century, when merchants issued cards engraved with customers’ personal information and used them to stamp credit documents. But smart cards came a few decades later in the 1960s.

• Smart credit cards aren’t actually as new as you might think. In fact, the first patent for a chip card was filed in 1968. And the first microprocessor card patent was filed in 1976.
• In 1992, the Carte Bleu payment system in France put microchips in all their debit cards. This started the popularity of “chip and PIN” cards in Europe, leading to the vast majority of credit cards and credit card terminals using EMV technology there.
• The U.S. was rather late to the smart credit card party. We didn’t start integrating smart cards until 2014. Since then, smart credit cards have become much more widespread, and most new credit cards are now issued with an EMV chip.

Image: ProStockStudio / Shutterstock

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