A smart card is a pocket sized card with implanted integrated circuits which can process information. It can receive input, process it and deliver an output. A smart card, as such can be a very reliable form of personal identification and a tamper-proof, secure information repository. Smart cards can be roughly divided into two types:

1. Memory cards which contain only memory storage components, and perhaps some specific security logic.
2. Microprocessor cards which have volatile memory and microprocessor components.

Smart cards are made of plastic, usually PVC The card may embed a hologram to avoid counterfeiting. They are normally credit card sized. It contains security features such as tamper-proof properties and is capable of providing cryptographic services.

The data in the smart card is transferred to the server through devices like ticket readers, ATMs etc.

Smart cards are mainly used for the following applications:

Pay Phones:
There is widespread use of payphones equipped with smart card readers. The main advantages are that the phone company does not have to physically collect the money, and the users do not have to bring coins or remember long access numbers or PIN codes. Smart cards have the advantage of being rewritable allowing advanced features like phone banking, automatic memory dialing and other services.

Mobile Communications:
Smart cards are often used as identification device for GSM digital mobile phones. The SIM cards are basically smart cards which store all the necessary information in order to accurately identify and bill the customer.

Banking:
Smart banking cards are used as credit or stored value cards, offering a tamper proof device. The intelligent microchip on the card and the card readers use authentication measures that protect the customers, merchants and banks from fraudulent use. Smart cards are also used for loyalty programs and discount coupons.

E-Money:
Smart cards can be used to store monetary values. Card readers retrieve the amount stored, and subtract the amount for the goods or services being purchased. Groceries, parking, Laundromats, cafes, public transportation and all types of vending machines are some of the purchases that smart cards can be used for. Radio read smart cards (RFID cards) will allow people through transportation systems, without the need of ticket vending machines or gates.

Health Care:
Smart cards can be used to safely store a patient's medical history. Doctors can access such information instantly, and update the data. Smart cards allow hospitals to instantly find the patient identity, allowing fast insurance processing. Doctors can be issued smart cards that allow secure and multi-level access to patients? medical information.

ID Verification and Access Control:
The use of smart cards allows running mutual authentication and encryption software in order to accurately identify the owner of the card. For advanced security needs, a smart card can be used as a tamper proof device to store information such as a user's photograph or fingerprints.