By adding a micro-chip to conventional plastic cards, financial services organisations extend their scope and reach. By adopting and adapting too slowly, however, financial services organisations risk major losses in market-share, and even contraction or outright failure. The term 'smart card' is subject to a variety of interpretations, but is most usefully understood as a conventional plastic card with a silicon chip added to it.
Smart cards are programmable, and hence can be applied to all manner of purposes.
A variety of means have been implemented whereby people can load value onto a card, and use it to make payments at appropriately equipped, unattended devices. These include multiple-use tickets for public transport, and telephone cards. Schemes that store data using punched holes, and even magnetic stripes, are highly insecure, and very easy to defraud. These have the highly desirable feature of being a great deal more secure. Depending on the design, they can also provide a means of gathering statistical information on transactions and card usage.