The Impact of Smart Cards
Running head: THE IMPACT OF SMART CARDS
The Impact of Smart Cards
Money and Banking I – BU322
March 17, 2010
The Impact of Smart Cards
The Digital Age has changed the way we do business and one of them is a technological innovation called the Smart Card. Though users tout its advantages the concept has been slow to take off in the United States possibly due to the disadvantages that continue to plague the concept. However with the continued direction of business and banking in this new age, we need to be prepared for this new way of doing business and the affect it may have on money and banking.
Before we can understand the impact Smart Cards might have on the traditional forms of money and banking as we know them, I think it is important to understand what a smart card is as well as some of the advantages and disadvantages that come with the technology.
What is a Smart Card?
A smart card resembles the current credit or debit card yet retains increased capabilities due to an embedded computer chip that holds and transacts data between users like a microprocessor (Smart Card Basics, 2010, ¶ 1). This means the card has capabilities similar to a computer as it not only has memory but can actually carry out transactions and store that information for future use. A debit card reflects merely the balance of an account in which the card is tied to such as a checking or savings account and when the card is used it basically acts the same as an electronic check and is an order to pay (Miller & VanHoose, 2007, pg. 24). A credit card operates as a stored-value card in which it contains predetermined funds. Both of these cards not only require identification but authorization as well.
Though a smart card looks and feels the same as debit and credit cards it operates somewhat differently. The microchip embedded in to the card holds a digital signature that is examined and authenticated during transactions whether at a retail location or in the comfort
The Impact of Smart Cards
Money and Banking I – BU322
March 17, 2010
The Impact of Smart Cards
The Digital Age has changed the way we do business and one of them is a technological innovation called the Smart Card. Though users tout its advantages the concept has been slow to take off in the United States possibly due to the disadvantages that continue to plague the concept. However with the continued direction of business and banking in this new age, we need to be prepared for this new way of doing business and the affect it may have on money and banking.
Before we can understand the impact Smart Cards might have on the traditional forms of money and banking as we know them, I think it is important to understand what a smart card is as well as some of the advantages and disadvantages that come with the technology.
What is a Smart Card?
A smart card resembles the current credit or debit card yet retains increased capabilities due to an embedded computer chip that holds and transacts data between users like a microprocessor (Smart Card Basics, 2010, ¶ 1). This means the card has capabilities similar to a computer as it not only has memory but can actually carry out transactions and store that information for future use. A debit card reflects merely the balance of an account in which the card is tied to such as a checking or savings account and when the card is used it basically acts the same as an electronic check and is an order to pay (Miller & VanHoose, 2007, pg. 24). A credit card operates as a stored-value card in which it contains predetermined funds. Both of these cards not only require identification but authorization as well.
Though a smart card looks and feels the same as debit and credit cards it operates somewhat differently. The microchip embedded in to the card holds a digital signature that is examined and authenticated during transactions whether at a retail location or in the comfort
References: A Framework for Global Electronic Commerce. (1997, July 1). Retrieved March 17, 2010, from http://s3.amazonaws.com/lcp/cibercultura/myfiles/A-Framework-for-Global-Electronic-Commerce-Al-Gore.pdf Al-Laham, M., Al-Tarawneh, H., & Abdallat, N. (2009). Development of Electronic Money and Its Impact on the Central Bank Role and Monetary Policy. Retrieved March 17, 2009, from http://iisit.org/Vol6/IISITv6p339-349Al-Laham589.pdf Disadvantages of Smart Cards. (n.d.). In web.mit.edu. Retrieved March 17, 2010, from http://web.mit.edu/ecom/Spring1997/gr12/4DISADV.HTM Miller, R., VanHoose, D. (2007). Money, Banking, & Financial Markets. Mason, OH: Thomson South-Western. Patrikis, E. (1998, March 9). Global Electronic Commerce – The Next Century. In ny.frb.org. Retrieved March 17, 2010, from http://www.ny.frb.org/newsevents/speeches/1998/ep980309.html Puffer, B. (n.d.). Digital Cash. In NOVAOnline.org. Retrieved March 17, 2010, from http://www.pbs.org/wgbh/nova/moolah/digitalcash.html Smart Card Alliance. (2010). In smartcardalliance.org. Retrieved March 17, 2010, from http://www.smartcardalliance.org/pages/publications-smart-card-security Smart Card Basics. (2010). In smartcardbasics.com. Retrieved March 17, 2010, from http://www.smartcardbasics.com/overview.html#why