An employee walks up to a building at Company XYZ. He opens a secure
door into his building, using a contactless smart card for clearance.
He walks into his office and inserts his smart card into a reader attached
to his PC, which gives him permission to log on. He moves between network
applications, Intranet and Internet, accessing the information he needs.
Leaving his office for lunch, he stops at a computer outside the cafeteria.
Using his smart card, he logs on again to check to see if an important
confidential email had arrived. Checking his permissions, the email
application automatically decrypts the email, which he reads and then
sends an automatically encrypted reply.
In the cafeteria, he buys his lunch using the electronic purse on his
card. Then he stops by the company store to buy a t-shirt, using the
smart card as a credit card. At home after dinner, he logs onto his
home PC to buy a birthday gift and a new software program. Inserting
his smart card into a reader attached to his computer's PC Card slot,
he charges the purchases, his credit information being encrypted by
the smart card and sent directly to the card issuer, who transmits payment
to the vendor. All these tasks and processes are enabled by one chip
on one card.
Sound far-fetched? This scenario is closer than you might think. In
the U.S., technology trends such as e-commerce and network access are
beginning to drive smart card usage by businesses, organizations, governments
and consumers. Within the next few years, we should see millions of
corporate and government employees, college students and consumers using
smart cards to secure all types of transactions: from corporate network
access to online purchases to payment for transit and shopping.
As the scenario above illustrates, smart card usage in the U.S. is
more broad and deep than one might expect. For example, smart cards
are filling a need as tools for securing access - whether it's access
to physical buildings, networks or computers, or access to e-tail or
e-commerce. One of the most attractive features of smart cards to U.S.
businesses and consumers is both their functio-nality and their device
independence. Smart cards bring added functionality to PCs, cell phones
and TV set top boxes.
This trend toward smart card adoption in the U.S. has been confirmed
by industry research. Frost and Sullivan, the Mountain View, California,
USA-based research and consulting firm, predicts that by 2005, more
than 52 million employees, students and other U.S. residents will carry
chip-based ID cards, replacing the password process currently being
used by PCs and other electronic devices. That will account for nearly
half of the 108 million smart cards the firm forecasts will be sold
into the U.S. market in the next five years.
U.S. smart card growth is part of an international trend. In 1999,
banks, telephone companies, governments and other issuers distributed
approximately 1.5 billion smart cards around the world, with U.S. penetration
at about 19 million. The U.S. market will contribute to this growth
in areas such as network security, e-payment, smart marketing, healthcare
and identification.
Smart cards add extra layer of security
One of the fastest-growing applications for smart cards in the U.S.
is network security. Businesses and the U.S. federal government are
seeking integrated, easy to implement methods for managing access to
networked resources.
By using smart cards for network access, companies gain an extra layer
of security and added convenience for employees. Smart cards work in
conjunction with existing security solutions, including Public Key Infrastructure
(PKI) technology, which uses cryptography and digital signatures to
authenticate users and ensure the secure transmission of data across
networks. GemSAFE™ Enterprise, Gemplus' flagship smart card-based
network security product, is one example of this type of solution. It
is designed to complement and enhance PKI-based solutions.
Smart cards enable IT departments to load digital certificates and
passwords onto a card instead of a PC, improving access and identification
portability. Employees can use the smart card to log in to the network,
access approved applications, encrypt and decrypt email and documents,
and access the Internet, regardless if they are on a PC, laptop or other
device. Because network access permissions are linked to a person, not
a PC, employees benefit from greater flexibility and convenience. Access
is no longer tied to a computer or office. Businesses benefit from a
more secure environment, eliminating many of the IT security headaches.
Network access smart cards are quickly gaining acceptance in the IT
marketplace. Many industry leaders are adopting smart card standards
and integrating smart card technology into their software and hardware
products. Microsoft recently launched the Windows for Smart Cards operating
system to ease smart card application development. In addition, smart
card technology has been adopted by major PC manufacturers, such as
Compaq, IBM and Hewlett Packard, as a key component of their product
offering. Next generation PCs will be equipped with smart card readers
to enable secure "anytime, anywhere" access.
Computing security is a major growth industry for smart cards, extending
beyond an organization's own internal network. Banks and other financial
institutions are preparing to offer customers more security when they
trade or process other transactions online, through the use of smart
cards. Another market is extranet access. Smart cards storing digital
certificates and encryption keys can be used by businesses to authenticate
resellers, suppliers and customers who have online access to extranets
or other computer resources. The smart card gives users permission to
perform a variety of functions: make purchases, check inventory, bid
and negotiate on contracts and securely transmit sensitive documents
online, but not access confidential network resources.
Smart marketing to build brand awareness
Smart card technologies are helping businesses promote their brand
by providing a means of connecting the physical and virtual worlds.
According to recent projections from Forrester Research, the movement
of companies from "bricks to clicks" will be dramatic in the
next few years. Researchers predict that by 2004, e-commerce will be
primarily used to boost sales at traditional retail outlets. Brand-name
entities can use the cards to cross-promote their bricks and mortar
and online stores to build a powerful brand identity. The concept of
smart marketing is being embraced by large credit card issuers and leading
online entities. Why? In addition to linking a merchant's web site and
traditional stores via a medium that can be used in both venues, smart
cards offer enhanced benefits to increase customer loyalty and convenience.
When cardholders are online, issuers and their commercial partners have
the opportunity to pitch products, offer electronic coupons and other
incentives. Smart cards allow the easy addition of other applications,
including loyalty programs and ticketing via a wide array of devices
- from cell phones to set-top boxes - to identify users and accept e-payments.
A recent Nintendo promotion illustrates the power of smart marketing
to cross-promote brands. Nintendo teamed with Blockbuster to promote
its popular PokÈmon Snap video game. Players took their game
cartridges to participating Blockbuster stores, purchased a PokÈmon
Collectible Smart Card, and used the two items at special kiosks in
the stores to print out one-of-a-kind stickers. The stickers were paid
for by the token stored on the collectible card. With this promotion,
Nintendo brought fun and innovation to a targeted niche of people, while
tying their brand to a physical retailer.
E-payment grows in popularity as Internet expands
E-commerce is another application where smart cards make sense. Security
is a crucial element in the continued growth and acceptance of consumer
and business-to-business Internet purchases. Smart card-based credit
cards are growing in popularity in e-commerce because they provide a
secure payment mechanism. The cards provide valuable consumer enhancements
such as secure storage of credit information in one central place instead
of with a multitude of vendors across the Internet.
This online purchasing application has already seen significant success.
One leading credit card issuer is offering a smart card and reader that
can be easily attached to a PC. When purchasing online, the cardholder's
credit and personal information is encrypted by the smart card. All
financial transaction processing is handled by the card issuer, which
processes the transaction and handles vendor payment. Its initial popularity
indicates that consumers prefer the convenience and peace of mind of
dealing directly with the card issuer, instead of releasing credit card
and other personal information to each e-tailer they purchase from online.
Healthcare regulations drive smart card adoption
Another area where smart cards are expected to see tremendous growth
in the near term is in the U.S. healthcare industry. Healthcare organizations
have been seeking ways to provide secure access to electronic files,
following U.S. federal mandates that require health care organizations
to have a network security infrastructure that ensures the privacy and
integrity of data access and transfer. The system must provide mobile
healthcare workers with authentication and network access from any location
within the organization.
Health care organizations have realized that their security and mobility
needs are best served by smart cards equipped with PKI technology (described
above). Smart cards offer several advantages, including the secure,
logical access to networks and data using a PIN-protected, card-based
access system, and the use of digital signatures to provide positive
identification of all individuals accessing the network. Additional
applications can be deployed as needed, including physical access to
restricted areas, insurance company claims links and pharmacy prescription
links. Already, the smart card's digital signature capability has eliminated
myriad administrative tasks and paperwork involved in medical communications.
Leading the healthcare industry in smart card implementation is the
Connecticut Hospital Association (CHA), one of the first U.S. organizations
to actively address federal compliance using smart cards. In June 2000,
CHA will have secured all 31 of its acute care hospitals and related
personnel with a Gemplus smart card PKI solution. The flexibility of
the smart card solution ensures its ability to evolve with and adapt
to the association's changing and diverse needs.
Multi-Functional smart cards popular in academic circles
Smart cards are becoming a standard solution for the academic world.
Many colleges and universities are giving employees/students multifunctional
cards that manage a variety of tasks, improving convenience and flexibility.
Students at some universities can now use one card to enable Internet
access, debit meal plans, pay for telephone calls and allow building
access. Since 1994, Florida State University (FSU) has been issuing
smart cards to students. CyberMark, a higher education card systems
specialist, currently manages the FSU program, and uses Gemplus smart
cards. The card is truly multifunctional, providing a variety of services
including student identification, building access control, library borrowing
privileges, loyalty programs with off campus merchants, secure access
to university records, and administrative voice messaging. With a single
card, students can carry out transactions that were time-consuming and
costly to process. In addition to the reduced administrative costs,
such systems allow universities to offer a far broader range of services
to their students.
One of the biggest uses for the smart card is for financial transactions.
Smart cards can be used for ATM withdrawals/deposits at an affiliated
bank, to pay tuition or as a pre-paid value for small purchases such
as snacks and laundry. At FSU, the smart card program continues to evolve.
Bus pass and meal plan services are under development as add-on applications.
Other applications include calling cards for telephone calls or debit/credit
cards for purchases of goods and services. The flexibility of the multi-functional
smart card simplifies many procedures, allowing the university to better
manage administrative processing and students to focus on their studies.
Why smart cards make sense in U.S.
With the dawn of the new millennium, smart cards are increasingly finding
their way into the life of U.S. consumers. Smart card success will continue
to be driven by businesses that use them to mimic current consumer behaviors,
while giving individuals control over personal information and providing
high levels of security. High-demand applications - such as the Internet,
e-commerce and security - will bring about widespread smart card adoption.
The U.S. market is the next great frontier for smart cards where the
opportunities are endless and the rewards are great.