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Issue Date: November 2000 (es)

Smartcards will replace magnetic strips cards because of their security levels - VELOCIT-e

November 2000

While the smartcard industry is still in its infancy, a report by IDC shows that a total of 284 million smartcards were issued in Europe alone during 1999, up by 44% from a year earlier. It is further estimated that there will be more than 1 billion smartcard users by the end of 2004 - a market size that just cannot be ignored.
According to Clive Handley, a Director of VELOCIT-e, the market-leader in secure transaction solutions, the security benefits provided by smartcards will be one of the reasons for their increasing uptake around the globe - a globe which is increasingly moving towards a cashless society.
"While a scarcity of smartcard readers on personal computers and other devices - and the relatively high cost of chip cards - is slowing down the adoption of smartcard technology, the operating foundation will grow in uniformity and stature in the next few years as equipment prices drop and interest in virtual and physical safeguards increases. People will appreciate the security enhancements that smartcards can bring. This will ultimately boost their popularity, besides the fact that they are just that much more convenient."
Adds Handley, "It is the Internet that is shaping up as one of the major markets for chip card use. An anticipated worldwide surge in electronic commerce will lead to more companies, individuals and organisations wanting to conduct business online. These users will want to use chip cards to store digital certificates and encryption keys, thereby enhancing levels of usage and security."
Authentication for remote transactions
Handley said that authentication for remote transactions is going to be the killer application in the new-age economy, adding that this is exactly the market his company is focusing on.
"This need for remote authentication will spark the widespread usage of smart cards. Much of this interest stems from the desire to improve security, such as is embodied in the current public key infrastructure, a set of services that use public key encryption (PKI) technologies to provide proof of identity, data privacy, nonrepudiation and overall data integrity for electronic commerce and other online transactions."
According to a recent report in ID World, cards manufactured by Minneapolis-based Datakey, for instance, have 32 KB of memory, compared to only about 250 bytes for a typical magnetic stripe card.
Security levels on smart cards are "streets ahead" of the more traditional magnetic stripe cards - and one of the reasons for this is to safeguard transactions conducted over the Internet. The latest smartcards, for instance, can store key lengths of up to 2048 bits using the common RSA algorithm. Most key lengths are 1024 bits, which means they are a lot more vulnerable to computer hackers.
"The longer the key length, the more computing time and power needed to break the algorithm," says Handley. "In addition, the chip's large memory allows a variety of security functions to be supported on a single card. The latest generation of smart cards can also contain private keys and digital certificates to safeguard Internet activity, as well as biometric templates for physical and virtual access."
Supporting biometrics
Commenting further, Handley said that it is hard to ignore these powerful benefits. "The chip card's portability also makes it a prime tool for supporting biometrics. Storing templates of a user's physical characteristics on a chip eliminates the risk of hackers stealing the data from computer hard drives - and enables offline authentication. Coupled with fingerprint identification, the smartcard becomes the technology of choice.
"With fingerprint identification, for instance, cardholders simply insert the chip card into a reader on the PC and touch a finger scanner. The finger image is compared with the template on the chip, allowing for a failsafe user authentication for the recipient."
But Handley does warn that unless people can use their card in every cash situation, the smartcard will never reach its full potential.
"If people can use their card all day in the city centre, but have to use cash to buy bread and milk on the way home, then the card cannot fully replace cash or ATM cards." Nevertheless, banks are already upgrading their ATMs and VELOCIT-e is offering a range of smartcard readers to the Internet buyer and smartcard POS terminals for the retailer.
"Tomorrow's terminals will, in reality, be small multifunction counter-based computers, with sophisticated hardware capabilities and connectivity support for a diverse range of peripherals."
For details contact VELOCIT-e on tel: (011) 258 6900 or e-mail:

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