About Smart Cards : Applications : Financial
A primary driver for smart card technology in payment applications is its ability to enhance the security of the payment card and the payment transaction to address fraud.
Historically, magnetic stripe technology was used for payment applications. Magnetic stripe technology is limited with respect to modern security techniques as payment transactions rely on static account numbers or data stored on the card. Because this static data is easily copied, information can be stolen and duplicate magnetic stripe cards created. Within the payment systems, fraud checks are therefore performed in the back-end systems to manage the risk of counterfeit or stolen cards being used.
Smart cards address the growing problem of fraud and offer a secure solution for both open and closed payment systems. The technology provides strong payment card security. Well-designed smart cards are very difficult to duplicate or forge and data stored in the chip cannot be modified without proper authorization (a password, biometric authentication or cryptographic access key).