Your credit card speaks for you and what your spending ability is. How much can you spend and how much have you already used up from your credit limit? All this can be found out using this rectangular piece of plastic. Certain stores have a facility wherein they use a voice authentication system with a touch-tone phone. The most common system though is the magstripe-card swipe terminal where you swipe the card at the terminal through a system of Electronic Data Capture ? EDC. There is also the option of using your credit card at virtual terminals on the Internet, where you can make your purchase online and pay for it online as well.



When you are at a store and you make a purchase, the cashier at the counter swipes your credit card on the magstripe reader and the EDC software dials a certain telephone number, which is normally an organization that will give them the go-ahead signal on a purchase request. This company is given the name of the store, the credit card number, the expiry date and the credit card limit and all this within seconds of swiping it. Once done, you sign on the bill and voila! The purchase is yours.

The power of owning a credit card is just that. Choose, swipe and sign and it is all done. Your signature at the back of the credit card is used to verify your authenticity or if it is a photo credit card then it of course has your photograph to ensure that it is not misused. Now, though there is an innovative application, which uses the highest form of cryptography. The smart card as it is called has a microprocessor in the credit card. This way, the user of the credit card will have to identify him every time he uses the card just as you would at an ATM dispensing center.

With a smart card, you will have to verify the card and the card will verify the user as well. This will ensure complete authenticity. Once the card and the card reader establish mutual confirmation, then the transaction is carried out in such a manner wherein no one, including the store cashier or the card owner himself can do anything at all about getting any information about the credit card purchase. This is a totally fraud-proof system. Apart from a PIN the user will know nothing else.

Smart cards first came into being in France in 1984. It is in fact replacing the regular plastic cards that we use in the United States now and Visa and MasterCard are very much in the league of changing the way we use credit cards now on. The smart card enables you to use it as a debit card as well as a credit card. You could also use it as a reloadable account, where you can spend from a certain stored account.

So this way, its enhanced memory enables you to use it in many ways much more advanced than the magnetic stripe cards that we have been hitherto using. This way, you need own only a single card instead of stuffing your wallet with a number of credit cards. The smart card today is not so widely accepted over various countries and establishments, though it is expected to take over the world soon.