Free Smart Card Uses, Benefits And Privacy Implications In The Banking Sector Research Paper Sample

Type of paper: Research Paper

Topic: Banking, Card, Technology, Security, Information, Development, Business, Transportation

Pages: 5

Words: 1375

Published: 2020/10/14


The use of smart cards is increasingly becoming popular in the contemporary society. A significant global population has become familiar with use of smart cards just like the use of telephone cards, GSM SIM cards as well as bank credit and debit cards (Ravi, 6). Technologists have anticipated that the old magnetic stripe cards are slowly being replaced by smart card due to their convenience in operation enhanced by an integrated circuit embedded within. Additionally, the convenience created by the use of smart card has been attributed to its IC that enables users to undertake more complex operations as compared to the use of old bank magnetic strip cards and telephone cards that were basically used for identification purposes (Ravi, 6).
Apart from the fact that smart cards enable clients to undertake complex operations, users are also attracted by enhanced technologies used in the development of smart cards that ensure protection of user’s privacy (Baack, 10). Privacy in relation to a client’s personal information has been considered a major issue in the service provision industry. The need for more advanced technologies that ensure information privacy and facilitate more complex operations has led to the development and use of the smart card. This discussion will explore and provide an explanation of the uses, benefits and privacy issues of smart in the banking sector. It will also provide an explanation regarding the anticipated future improvements that may be made on the smart card technology and associated impacts.


Research indicates that the banking sector is one of the industries that have enjoyed the use of card technologies since the early 1950’s (Ravi, 8). The earlier card technologies were specifically used for personal identification processes in the banking sector and their uses were majorly restricted in the undertaking banking activities. However, due to increasing rates of fraud in the use of these magnetic strip card a need for a more secure card emerged. Stakeholders in the banking and technology sectors introduced a more advanced technology that could enhance security and operations among their clients (Ravi, 11). This led to the development of Card-medium, the Europay-MasterCard-Visa that enhanced authentication and operational process of the cardholders. However, due to its limited use, a need for the development of an integral card i.e. a card that could protect the security interest of clients and allow them to undertake multiple uses emerged (Ravi, 11). The Smart Card is the most recent technology that is currently used not only in the banking sector, but also in other retail businesses ( The transport sector, health and retail industry are among other businesses using smart cards for purposes of identification, payment of bills among others.

Uses, Benefits and Security Issues of Smart Cards in the Banking Sector

In as much as the banking sector is still issuing magnetic stripe cards to some of its clients, the use of smart cards has increased since its inception in the early 21st century (Baack, 12). A research conducted by Barclays Bank indicated that many clients in the banking sector prefer the use of smart cards owing to the fact that it can be used to undertake different operations and ensures data security (Baack, 12). One of the uses of smart cards in the banking sector involves undertaking e-commerce activities. This is due to the fact that smart cards allow clients to store cash for purchase as well as their personal information. The essence of carrying personal account information, buying and credit preference data provides banking clients with easy access by a click of a computer mouse rather than undertaking manual modes of application (
Additionally, the use of bank-issued smart card facilitates e-commerce activities in that it can automatically control and manage a clients’ expenditure through provision of set limits as well as reporting. On the other hand, clients within the banking sector prefer the use of smart card undertake e-commerce activities because it facilitates processes involving micro-payment for instance: Making reprint charges that basically involve small amounts of money (
Unlike the magnetic stripe cards, banks are currently issuing smart cards to their clients for purposes of stored value ( Banks interested in tracking their clientele’s activities through loyalty program are currently using smart cards to implement this process. Loyalty programs are basically meant to track clients that have exhibited a high level of repeat in their transactions with the bank, thus, providing them with incentives. This use has not only been evident in the banking sector, but also in the retail industry. This is because smart cards are more preferred compared to cash.
Bank issued-smart cards are also used in the healthcare sector. This has been facilitated by the fact the cards contain personal information of the clients such as: Physical address, personal identification information i.e. social security number, beneficiary among others (Pacifici, 12). The use of bank-issued smart cards in the health sector is also preferred owing to the fact that: It facilitated quick and accurate identification of patients. Costs associated with the use of a bank-issued smart card are also lower compared to direct and manual transactions. Moreover, patients prefer using their bank-issued smart cards to pay medical bills majorly because it is more convenient and safe to carry from one place to another (Pacifici, 12).
Bank-issued smart cards are also currently used in the transport sector in that clients can pay transportation bills and other bills such as; parking lot bills, gas bills, transport insurance, repair and maintenance among others: This bills are directly and accurately deducted from their bank accounts ( Apart from the multiple uses of bank-issued smart cards, many organizations and a significant number of people prefer the use of smart card due to its enhanced security measures. Smart cards ensure security and privacy of information as it restricts access and use of personal information. Through its two-factor authentication operational procedure, bank issued-smart cards ensure privacy and protection of a client’s personal data and value through the internet ( The two-factor authentication process of the bank-issued smart card also eliminates potential threats such as Trojan Horses and Man in the middle that usually reply personal passwords and usernames (

Current and Future Developments in Smart Cards

The Oracle Corporation through its subsidiary, Sun Microsystems, and the Microsoft Corporation have undertaken research that has led to the development of more advanced smart cards (McKinnon, 4). They have developed a built-in software hook within smart cards so that users are not subjected to the use of usernames and passwords. Specifically, Microsoft has developed a comprehensive credential platform on the Crypto Service Provider as well as around the Scard DLL (McKinnon, 4). These efforts are geared towards enhancing the operational procedures of smart cards and the security of clients’ information. These developments have also ensured that users have authorized and authenticated access to certain data based on pre-determined privileges. With the current platform given to technologists and researchers by governments and research institutions, it is anticipated that smart cards will be subjected to future developments that will enhance its security and convenience among users.


Considering various benefits of bank-issued smart cards ranging from their capacity to facilitate multiple uses to enhanced security, it is apparent that one can identify the reasons why smart cards are currently more preferred. That is, the application of smart card to undertake various transactions has fulfilled stakeholders’ need for efficient and secure operations. The success factor associated with the use of smart cards can be attributed to the efforts that have been undertaken by research and technological organizations to develop more advanced means of financial transaction. Additionally, smart cards has not only enhanced banking processes, but also expanded other scopes of socio-economic development for instance: The transportation sector, health sector, retail industry among others. This is an important indication of the role of this technology in facilitating societal development in a holistic perspective. However, it is important to acknowledge the fact that smart card technology just like any other technology, is subject to change or improvement due to the ever changing technological advancements currently experienced.

Work Cited

Baack, William. "US Benefits Programme Uses Smart Cards." Card Technology Today (2012): 5. Print.
McKinnon, John. "Microsoft Demonstrates Smart Card Technology." Card Technology Today 13.5 (2013): 4-5. Print.
Pacifici, Giorgio. Digital Payment Systems and Smart Cards. Milano: FrancoAngeli, 2004. Print.
Ravi, Vadlamani. Advances in Banking Technology and Management Impacts of ICT and CRM. Hershey, PA: Information Science Reference, 2013. Print.
Smart Card Alliance." About Smart Cards : Applications : Transportation ». Web. 27 Jan. 2015. <>.
"Smart Card Overview." Smart Card Overview. Web. 27 Jan. 2015. <>.

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WePapers. (2020, October, 14) Free Smart Card Uses, Benefits And Privacy Implications In The Banking Sector Research Paper Sample. Retrieved December 09, 2023, from
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Free Smart Card Uses, Benefits And Privacy Implications In The Banking Sector Research Paper Sample. Free Essay Examples - Published Oct 14, 2020. Accessed December 09, 2023.

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