Smart Card Applications: How Many Have You Used Today?

By Philippe Julien, Gemplus

It was a beautiful morning. Paul arrived early at the airport – the journey was so much smoother with the new electronic toll system on the highway. Sensing his car, the barriers opened automatically to let him into the car park. “The monthly bill is not going to be small,” he pondered as he drove through. Travelling more than 3 days a week, Paul was a ‘gold’ frequent flyer.

Paul walked briskly through the airport – the business traveller’s routine morning workout – and passed quickly through customs with his new electronic passport, pressing his finger onto the biometric sensor.

Once in the departure lounge, he gave a quick call to the kids on his mobile phone, paid for a newspaper with his e-purse, and bought a scarf for his wife with his credit card. “Another 1000 Air Miles,” he smiled to himself, as the cashier completed the transaction. Noticing the photo ID worn by the cashier, and by every airport employee, he couldn’t help but wince at the unfortunate photograph! Paul made his way to the departure gate, sat down quietly, inserted his smart Internet access card into his laptop and surfed the Net, waiting for his flight to be called.

Paul had just used 10 smart card applications in the last 15 minutes!

Superlative technology

In the last ten years, smart cards have become so much a part of our daily routine that we hardly notice them anymore. Smart card technology is convenient, easy to use, very secure and often transparent to the user, making it ideal for identification and payment applications. In 2004, over 2.5 billion smart cards will be issued worldwide.

To illustrate how quickly this technology is being adopted, it is worth mentioning that even as early as last year, world-wide sales of micro controller smart cards (carrying a chip with processing capability) had already outstripped world-wide sales of memory cards.

We don’t have to look much further than our own daily lives for concrete proof of this move towards convenient smart card technology:

• When was the last time you used a coin-operated public telephone? Nowadays, most of us would use our GSM mobile phone, wherever we are and whenever we need to call. SIM cards (the wireless smart card) represent roughly half of the micro smart cards shipped today and are used by more than 1 billion mobile customers worldwide.
• How often do you use your checkbook? Payment cards are the second largest market with a set of applications such as e-purse, debit or credit, as well as loyalty programs.
• In a few years, ID cards will also be ‘smart’, and old practices such as buying paper tickets to ride public transport will become obsolete.

One card for all?

The pioneers of smart card technology initially imagined that one card would be sufficient to perform any and all functions and applications that we might require. In fact, smart cards have become so versatile and robust that it now makes more sense to optimise smart card platforms for a specific range of applications. In this way, both issuers and users get much better value from their smart cards.

Creating Value for issuers and users

The smart card platform is easily customised to suit the business requirements of issuers and the specific needs of their customers.

Gemplus works with its clients to design card platforms by applying experience and technological excellence to specific projects. As a rule, the following factors will be high on the agenda:

Security

Different projects demand different levels of security. A bank card, for example, will require much higher security than a vending machine card: cards used in relatively ‘closed’ environments, where boundaries are clearly defined, will use simpler defense mechanisms.

Interoperability

‘Standalone’ applications that interact very little with other environments will be developed very differently from ‘open model’ applications that interact with environments whose standards may vary.

Fixed vs. evolving applications

A fixed application is defined once for all users; evolving applications will require updates such as remote loading.

Ultimately, the value of any application will depend on how efficiently it performs the tasks required by both the issuer and the user. And applications can vary enormously, from the very simple – a smart card that replaces a single-use paper ticket for public transport – to the very complicated – enabling mobile network operators to remotely manage the mobile environment of any user’s 3G phone. The associated cost and development time of smart card applications is likely to vary accordingly: a single smart card can be as cheap as a few tenths of a cent or as expensive as several tenths of a dollar.

Mobile Network Operators

Today, mobile network operators are turning to high-end cards with the most advanced security features. This is because they realize the strategic role the SIM has as the only part of their network that stays with the customer. Based on the Java Card™ operating system, with 64, 128 or 256K of on-board memory, these cards are really an extension of the Java environment used by the network or by the mobile handset. They allow for remote loading of new voice and data services and applications, as well as application activation on the SIM card. As an integral part of the next generation 3G standards it is also playing a role in smoothing this technology migration and guaranteeing continuity of service.

Banking

The banking industry has not yet widely adopted open platforms. National Payment Associations such as Carte Bancaire in France or ZKA in Germany often elect to use a specific vendor to develop a proprietary application for payment and e-purse where security is, naturally, of utmost importance, requiring stringent qualification policies.

Today, banking applications operate in fixed environments that do not require ‘post-issuance’ application loading. It is considered that ‘post-issuance’ applications might represent an unnecessary security risk. Even in the case of e-purse applications, the banking market remains a low-cost/high-volume arena for smart cards.

ID

Multi application cards for national ID projects are at the other end of the high-tech market. Governments require very high ‘domestically driven’ security (no government wants to see its cards hacked by another government), multi-applications (international ID programs but also local physical access controls) and sometimes biometrics. The application environment is less standard than the GSM environment but nevertheless demands high-end smart cards. These cards are also based on open platforms and can have a ‘dual interface,’ with a ‘contact’ chip used in conjunction with a ‘contactless’ chip that can be read from a distance by a contactless reader

Contactless technology

The contactless smart card protocol is likely to be the next breakthrough in smart card technology.

Mass-transit applications with low-end, contactless memory cards are now a basic requirement for public transport systems. Convenience and throughput are driving factors for operators of these systems: highway drivers don’t need to slow down to pass through toll booths and skiers don’t need a pass every time they want to use a lift.

The banking industry is now developing programs with higher end microprocessor cards to save time at the cashier or gas station. This type of application is likely to see the retail business welcomed into the smart card family, a move that has been slow until now.

Challenge for the future

So, Paul should really be planning his next business trip to Seoul, South Korea, the new Mecca for multi-application products. In Seoul, you can already ride the subway combined with a standard banking application. And this doesn’t mean using your bankcard – the same application can also be embedded in the shell of mobile phones. The future is going to be filled with interesting challenges for card manufacturers.