That means it's harder for thieves to glean account numbers. Experts say that's because they're expensive to produce in comparison with magnetic stripe cards, consumers aren't convinced of their benefits and merchants haven't embraced the technology. That may be changing. American Express started offering a smart card called Blue two years ago. Industry analysts estimate the company has signed up about 1.5 million Blue cardholders since then.
Many colleges issue smart cards to their students.
For example, the University of Michigan gives its students a smart card called the Mcard. It lets students enter their dorms, use the university's libraries, pay for meals, make phone calls and shop at nearby stores. The retail industry seems to be the largest challenge facing smart cards. Retailers are reluctant to invest in smart card readers while most consumers still use cards with magnetic stripes on them, The Gartner Group's Kerr said. They'll wait until their systems' normal life cycles are up and then think about smart card readers.