Smart cards look like standard plastic cards but are equipped with an embedded Integrated Circuit (IC) chip. These cards can store information, carry out local processing on the data stored and can perform complex calculations. Smart cards can store 1,300 times more data than the magnetic strip card (the typical Indian credit card) that stores 200 bits. These cards can store data for more than 10 years, and can be read or written on more than 1,00,000 times. Smart cards come in two forms: Contact cards, which require a card reader; and contactless cards, which use radio frequency signals to operate.

A smart card is a 'miniaturised' personal computer (PC), which can be used for a dazzling array of applications, and also as 'digital' cash. It contains a microprocessor, memory and tailored software. The software security system used for these cards is almost as foolproof as those used by nuclear establishments and leading international banks! Smart cards can manage security procedures using passwords and state-of-the-art encryption techniques.

Further, identity traits such as digitised photos, signatures and fingerprints being placed on the card make it fraud-proof. If credit cards did away with muggers, smart cards do away with credit card fraud.

The innovation of Smart Card dates back to 1975, when the French inventor Roland Moreno patented a credit-card sized plastic card with a microchip embedded in its top-left corner. After two decades we now have over a billion such smart cards in use in banks, airlines, telephones, department stores, road-side vends, healthcare, schools, national identity cards etc.

Smart cards are a foolproof medium of record which need no back up on paper or a computer floppy. Smart cards unlike Computer floppies do not get 'corrupted' with heat, dust and magnetic fields. They are almost totally resilient to dust, high temperature, humidity and computer viruses.

The quick popularity and acceptability of smart cards induced major Credit Card providers enter the new bandwagon. Mastercard has acquired Mondex, a French company, and Visa has acquired the American Digicash, both leading global smart card issuers. American Express Bank accepts 'Proton' smart cards issued by Banksys, Belgium.

"Compared to conventional data transmission devices such as magnetic stripe cards, smart cards offer enhanced security, convenience and economic benefits. In addition, smart card-based systems are highly configurable to suit individual needs. Finally, multi-functionality as a payment, application and networking device renders the smart card as the perfect user interface in a mobile, networked economy. Smart cards incorporate encryption and authentication technologies that can implement the issuer and user's requirements for the highest degree of security. Using encryption, data can be securely transferred via wired and wireless networks. Adds White, "Coupled with biometric authentication methods which rely on personal physical attributes, smart cards are used in distributing a government's welfare payments in order to reduce frauds and abuse. Health care cards allow doctors to access and manage a patient's medical records and insurance information without compromising privacy."

"Smart cards are cost-effective in the long run as they cut down the cost of keeping paper records. They also reduce the time spent on updating paper records, and at many places they could replace human intervention. Contact and contactless toll payment cards streamline toll collection procedures, reducing labour costs as well as delays caused by manual systems. Maintenance costs for vending machines, petroleum dispensers, parking meters and public phones are lowered, while Khaitan feels revenues could increase about 30 percent according to some estimates, due to the convenience of the smart card payment systems in these machines. A BEST pilot project in Mumbai already uses contactless smart cards on one of its busiest routes, and contactless cards are also being used at the Delhi-Noida toll bridge, where the company is using this technology to offer expressway passes to the bridge. Under the scheme, users of their gold card do not need to stop at the collection centre to pay toll."

[Source - "Express Computers" IT Business Weekly dated 28.01.2002]

At present, India has close to 3.4 million smart card users, a number expected to reach 5 million users by the end of the current fiscal and close to 14.7 million by the end of 2004.

Smart cards are gaining pre-eminence as the ultimate portable and network personal computers of today. With the growth of e-commerce , card based personal systems will remain the most common online payment method. Businesses and countries that do not use these technologies are unlikely to capture global markets. With the availability of better security technologies and lower costs, smart cards have the potential for use in many applications such as the banking retail payments, vehicle registration, internet payments, citizen ID, e-governance, driving license , health records etc. Deployment of smart card in welfare schemes such as public distribution systems would ensure timely and efficient benefits to the targetted audience . There is a large local market for smart cards in India and an integrated approach for widespread deployment of smart cards is being conjectured with active participation from major user departments , financial institutions and industry. In this context , and also to ensure interoperability , it is necessary to define common standards for multi-Application Smart Cards in India.

[Source: SANDEEP New Delhi published in "The Week" June 21, 1998 edition - Website -http://www.the-week.com/98june21/biz2.htm]

"The good news is that smart cards have reached India, too. Scooter maker LML, Kanpur, has evolved a blue-print for change centred on smart cards for its vendors, employees, distributors, depots and service centres.

"Cards are also used to assign selective access to people in the computer and R&D centres. The despatch and distribution system at LML is 'smart'. The invoice, complete with all the details of the consignment, chassis and engine number, colour, and model number, is stored on a card and sent along with the dispatch truck. LML dealers and depots all over the country have been equipped with smart card terminals which effortlessly copy the invoice into their PCs. Only unloading the vehicles takes time. The dealer acknowledges the receipt on the card itself and the card is sent back with the truck. At LML's end, the card is 'read' and the delivery is automatically recorded on the computer. "The paper work is very less now," said Sanjay Kumar, an employee. "A lot of running around is saved."

"The 'smartisation' of the vendor management system at LML has helped it implement 'just-in-time' materials management. The company receives around 1,000 consignments every day from its vendors. It would have taken two to three hours for each vendor's goods to be received by the purchase department sans the cards. Now for smart cards this takes less than half an hour. "I can do more business in a day now," said Manoj Kumar, a vendors' representative.

"All 6,000 LML employees have been issued personalised smart cards. All personnel details and privileges are 'loaded' on the card along with personal and family data, salary, leave, health insurance, provident fund and ESI records. There is no need for paper files, smart cards handle cash payments and receipts. No more cash and signatures on vouchers. The card is used to mark time-in and time-out at the plant and it carries shift duty details, too. "The plant has become more employee-friendly with the introduction of electronic attendance, access and canteen coupons," said B. Srinivasan, vice-president, information technology (IT).

"The company's 60,000 authorised service centres are also being integrated into the 'smart' world. Mobile hand-held terminals are used to collect data about their activities, which is then loaded on to the computer at regional offices linked to the headquarters' computer. "In the Indian situation of poor networking and communication, smart cards provide the only viable solution to just-in-time-related problems," said Srinivasan.

The hand-held terminals capture 50-60 parameters such as number of scooters repaired on a day, model-wise details of repairs and the number of trained people involved. This data is processed for inputs to manufacturing and marketing strategy.

"Maruti Udyog, Delhi, has provided a section of the employees with smart cards. Potentially similar in application to the ones at LML, the smart cards with the car manufacturer are limited to attendance and access control usage for now. "We required a foolproof and convenient system for restricting entry in our factory at Gurgaon," said Pravin Gosain, deputy manager, IT. "Smart cards were the right solution to our needs."

"Godavari Sugar Mills in Bijapur, Karnataka, has implemented a Smart Farmer programme for sugarcane farmers. This will dramatically improve data management regarding supplies, payments, crop yield, fertilisers and loans. The interface between the sugar mill and the farmers has been revolutionised.

"It is this apparent lack of complexity that is facilitating the growing application of smart cards. A UN agency is using 30,000 of them for rural water resource data management in villages of four districts in Madhya Pradesh and Andhra Pradesh. This involves dedicating one smart card for each of the water resources, say a tube-well. The card would be in the custody of the panchayat and would contain all the details about the tube-well.

"When the local administration carries out any maintenance work, the card will record the details through a terminal carried by the technicians. Later the data can be downloaded at the district headquarters' computer. This will minimise corruption, the technicians will not be able to file 'work completion' reports without actually doing the work."

"Smart cards could be issued as national identity cards, driving licences, medical cards, bank account cards and voter cards. And this would be foolproof; a smart cannot be fabricated or duplicated.

"However, a 'smarter' world would require a smarter populace with a new mindset to exploit the potential opportunities thrown open by smart card applications."

RBI had earlier set up a pilot project called SMARS (smart rupees) at IIT Powai for formulating technical specifications for e-purse by issuing guidelines for the Indian banks to induct smart cards in the banking system to implement various transactions, including e-purse.

Other cases of smart card usage in India include usage as a driving license in Gujarat, by BPCL as a PetroCard in conjunction with Schlumberger, as a ration card in Kerala, by Amul to store details of milk transactions from farmers to the cooperative, and as ID cards by the Goa and Karnataka governments. Even a church in Bangalore has convinced members to store their genealogical data onto smart cards.

About 2,00,000 victims of the 1984 Bhopal gas tragedy have been issued smart cards, which contain their medical history. Doctors can thus access their health data at the touch of button. In Nayla, a village in Rajasthan, members of the women's co-operative society have been using smart cards to maintain their milk delivery and payment records. Sugarcane farmers too use similar cards. In Gujarat, the government issued smart identity cards to fishermen and their dependents to get rid of pretenders posing as a fisherman's kin to claim compensation. The cards are also used to identify real fishermen from cross border infiltrators who pose as fishermen.

"Bank of India launched 'ePurse' in Pune. This was the first time a PSU bank launched a stored-value payment card. Having taken Pune by storm, this project will be taken nationwide this year. ICICI Bank and Venture Infotek announced a technology tie-up to launch the MAHE (Manipal Academy of Higher Education) campus card. The card is a smart card that enables the students of MAHE to make electronic payment for all purposes within and around the campus both in Manipal and Mangalore. There is a similar smart card at the Infosys campus too. A merchant-centric loyalty programme called 'Anmol'. Through this programme, each retailer can initiate his own loyalty programme, without making any investment in infrastructure. The loyalty card is be customised to the retailer's requirements, and he can decide the terms and conditions of his programme.

"The 'Sneha' smart card programme for micro-collections. For micro-finance, the 'Sneha' card serves as an electronic passbook to maintain records of all transactions.

"Venture Infotek also launched the BPCL PetroCard, which has been a phenomenal success because of the ease of paying by card for filling petrol in their vehicles, rather than paying by cash each time.

"IOCL : IOCL has a set of fuel stations which are COCO (company owned, company operated), where they have introduced these Contactless Cards for Fuel dispensing . These cards not only serve as pre paid cards , but also as credit cards for their credit customers, where the billing take place Monthly. The Front End sales application with Contactless Smart Card Interface is integrated with Back Office Accounting Application. The application is a versatile, easy-to-use, 32 bits, complete inventory and accounting solution for petrol pumps. It maintains the unique type of inventory of petrol pumps and its online updating of stocks and Customers Accounts.

"SIES IMS: The Online Library Management program for SIES College is developed for all the students and staff of the college. Students/Staff having this card can avail facility to receive books, periodicals, CD etc. from the library and also will be given access to the computer lab. The intention here is that, only valid cardholders will be entitled for the amenities. Also the library does not have to bother about the books issued, delays in book retrievals, calculating of penalty points as all the information is stored on to the card as well as in the database. Also it helps to monitor the usage time of computer and facilities in the lab."

[Source - "Express Computers" IT Business Weekly dated 28.01.2002]

"According to S Swarn, secretary of the Smart Card Forum of India (SCAFI), the Indian chip card market, comprising GSM, payphone, driving licenses, banking and loyalty applications is likely to grow from the current 15 million smart cards to 400 million in the next few years. These growth rates are based on the assumption that the GSM-SIM cards subscriber base itself is likely to grow at a CAGR of about 60-80 percent, as stated by the Cellular Operators Association of India

"What will boost the market further is a slew of e-governance projects on smart cards, especially in the areas of transport applications and National ID card projects. The foundation has been laid with some major projects already implemented or underway.

"In the area of driving licenses and vehicle registration, some of the major projects are Gujarat Vehicle Registration, Maharashtra Vehicle Registration, Chandigarh Driving License, Madhya Pradesh Driving License & Vehicle Registration projects.

"Some of the smart card projects in the toll collection area are by Maharashtra State Road Development Corporation, Hubli-Dharwar bypass, Vadodara-Halol bypass and Narmada toll bridge. As far as the potential in transport applications is concerned, Gujarat has already issued 1.50 million smart card-based driving licenses, with the potential for over 10 million cards. The Gujarat Vehicle Registration project started in 2001, is operational in 27 regional transport offices (RTOs), and is issuing approximately five million cards in the next four years. On the other hand, the Madhya Pradesh Driving License and Vehicle Registration project has targeted issuing 2.5 million cards in five years. Added to this, the Ministry of Transport recently issued guidelines regarding issuance of smart card-based driving licenses, and six states are soon going to invite tenders for the same.

"The recent standardisation of the operating system (OS) for transport applications, called the Smart Card Operating System for Transport Applications (SCOSTA) will also propel uniform growth in this market."

["Source Express Computer" - IT Business Weekly - URL - http://www.express-computer.com/20021014/newsan1.shtml]