A smart card is any card that has an integrated circuit on it. It does not have batteries, as the size of a card is too small to mount all but the smallest of special-purpose batteries, which are currently too expensive. Because it has no power on its own, the card must be run through a reader to temporarily give it power so that the data on the card can be accessed. The first were used to pay for telephone calls in France.
There are a variety of applications for the smart card, including payment cards, identification cards, access-control cards, cards for public transit, insurance cards, and the SIM cards found in cell phones on the GSM network. When a card contains only memory elements, it is called a memory card. Memory cards, usually a bit thicker and smaller than the type of card that fits in a wallet, are often used to store saved games for video game systems
The chip in a smart card will usually hold several processing elements, some of which will be devoted to security and authentication. Because these cards are often used in payment systems, preventing fraud is a high priority. Usually, they come with an associated PIN number, which has to be entered into the reader by the user for all but the smallest transactions. This helps cut back on fraud.
All cards have some form of electronic memory that can be rewritten by an external card reader. For example, in a payment card, the funds available are sometimes represented on the card itself, and when the card reader interacts with the card to perform a transaction, it deducts funds appropriately. On the surface of every smart card is two electrical contacts, through which current flows when the card is inserted into a reader.
The smart card was independently invented and patented by several people throughout the world in the 1970s, when integrated circuits got small enough to fit on something the size of a card. The newest cards contain RFID chips, which permit contactless interactions with card readers, rather than having to put a card into a machine for it to be read. These cards exploded in popularity in the 1990s, and chances are that most people have several in their home, even if they aren't explicitly aware of them.