Introduction

Within the past five years, smart cards and smart card readers have become a strong weapon against those who use other people’s debit and credit cards in a fraudulent manner. A USA Today article from January 9, 2014 opens with a story about an accountant, Bruce Schmeidlin, from Des Moines, Iowa, who no longer worried about someone fraudulently using his credit card because his company had given him one with a chip on it. The chip confirms his identity, containing his PIN, or personal identification number.

Hence the need for smart card readers. They are access control systems. They are the computers you see at the checkout lines in department stores, grocery stores, and your corner party store. The more modern ones you see come with a chip reader. Those with such a device will let you know that if you have a chip card, you must place it in the chip reader slot, or otherwise it won’t be able to read your card. The readers as they are today will still read your old style, non-chip card. But who knows how long before the old readers become obsolete?

Smart Card Readers1

The Reason?

More credit card companies–as well as debit card issuers, such as banks, are issuing chip cards. In fact, if you have received a non-chip card, the next time your card expires, you will probably be given a card with the new technology on it. There have just been too many reports of stolen credit cards, as well as identity theft for card companies not to switch. They are faced with a decision: Either switch to the new technology, or keep losing money having to replace cards. So it’s a win-win situation for the financial institution and the consumer. The given institution can look forward to saving money, while consumers like Schmeidlin, can breathe more easily because his identity is less likely to be compromised. And that is important to people like him because if, for instance, his company-owned card came up missing, he would not have to worry about losing his job because of becoming a suspect in the authorized usage of his card.

What Exactly is a Smart Card?

Microsoft describes it as a “small, tamper-proof computer” with a chip on it. It can only be used on one condition: The owner of the card must constantly prove who he or she is by communication with the device by one of three methods: a PIN, a retina print, or a fingerprint. This technology is based on the fact that everyone’s fingerprint or retina design is unique. This means that if you are not the person with those matching characteristics, you do not get to use the card. This cuts down on the incentive to procure a card that is not yours.

Conclusion

Smart cards–and hence, smart card readers–are a technology that is here to stay. Imagine how much money you will save by adopting them for your consumers. Also, you can adopt them for your employees. Thus if you end up having to fire that employee, you can cut up the card, denying access to the workplace forever. Also, universities use them for access to the residence halls. This results in increased security for all your students who live in the dormitories. In buying new smart card readers, remember that the upgrade may cost you a bit of money, but imagine how much money you will save later down the road with fewer instances of identity theft.

References

http://technet.microsoft.com/en-us/library/dd227362.aspx
http://www.usatoday.com/story/news/nation/2014/01-09/encrypted-chips-fight-credit-card-fraud