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  Historical Overview of The Card Industry

presented at
CARDTECH/SECURTECH 1998, Washington, DC April 27, 1998

Introduction


Quick Links

What are card techs
Intro to card technologies
What is Mag Stripe
ID card history
Reference Material
Technology links

When we use the term "card technologies", what do we mean? The easy answer is - any technology that can be placed on a card. What is a card? Typically we think of our credit or bank card but there are other sizes and materials used for different applications. The card can be made of plastic (polyester, pvc, or some other material) or paper, card, or even some amalgamation of materials. The common point is that the card is used to provide "access" to something and it includes some form of AIDC (Automatic Identification and Data Capture) technology.

There are currently three main technologies we think of when we mention card technologies. These are magnetic stripe, smart cards, and optical cards. Other technologies can be put on cards as well (such as bar codes, touch memory, etc.). Often the card will have printing on it which may involve technologies such as Dye Diffusion Thermal Transfer (D2T2) direct to card printing.

The History

Cards have been with us for a long time, especially if you use the broader definition of what a card is. When you start to talk about "our industry", there are a few dates that may be of interest.

Key Events

1930

Charge a plate

1937

First Social Security card issued

1950

PVC

1951

Franklin National Bank – first credit card

1952 and later

Credit cards from Chase Manhattan, Bank of America, Marine Midland Trust

1960

Credit card & ATMs

1960s

London Transit Authority magnetic stripe tickets in the London Underground

1960s (late)

BART Transit tickets with magnetic stripe

1970

Suggested use of magnetic stripe on ATB

1971

Patent 3702464 – basis for card with IC

1973

Magnetic stripe standard

1978

Smart card standard

1980

Magnetic stripe mandate on bank cards

1985

Renewed effort for magnetic stripe on ATB

1992

Contactless cards standard

1994

EMV specifications for electronic cash

1994

Optical memory card standard

1996

High coercivity magnetic stripe standard

As we approach 60 years of card technology, you see that we have encompassed a great many achievements. Many of them, we use everyday and don’t even think about. How many "cards" do you have in your wallet right now, probably between 3 and 10 if you are a typical business person.

The Technologies

 So what are the technologies that we use with cards? Here is a list of the common ones, along with a brief description of each:

Barcode

A printed technology using "black and white" bars to encode the data. From early beginnings of simple barcodes that could only encode a few digits, today there have been over 250 barcodes invented. Luckily many of them have fallen by the wayside and we only concentrate on a few of these. Linear barcodes including U.P.C./EAN that we see every day on all our retail purchases are perhaps the most pervasive, however, the new two-dimensional barcodes that include error correction and detection are becoming more used. Large amounts of data can be stored on a small symbol, making them very useful for marking small objects. The cost of printing a barcode is very low, but they cannot be changed without replacing the label. Common linear barcodes include: U.P.C./EAN, Code 128, Interleaved 2 of 5, and Code 39. Common 2D codes include PDF417, MaxiCode, and Data Matrix.

Barium Ferrite

Small high power magnets that are buried in a plastic card to form a pattern. This type of card was very popular in access control cards in the 1980s. Problems with the cards included the extra thickness card needed to embed the magnets and the erasure of conventional magnetic stripes

Contact Smart Card

Smart cards are credit card-sized plastic cards that contain relatively large amounts of information in an imbedded micro-chip. Smart cards differ from magnetic stripe cards in two ways: the amount of information that can be stored is much greater, and some smart cards can be reprogrammed to add, delete or rearrange data.

There are several terms used to identify cards with integrated circuits embedded in them. The terms "chip card," "integrated circuit card", and "smart card" really all refer to the same thing.

There are two types of smart card. The first is really a "dumb" card in that it only contains memory. These cards are used to store information. Examples of this might include stored value cards where the memory stores a dollar value which the user can spend in a variety of transactions. Examples might be pay phone, retail, or vending machines. Another example of a "dumb" card is the memory that is plugged into a Personal Computer (PC Card - used to be called PCMCIA).

The second type of card is a true "smart" card where a microprocessor is embedded in the card along with memory. Now the card actually has the ability to make decisions about the data stored on the card. The card is not dependent on the unit in which it is plugged to make the application work. A smart purse or multi-use card is possible with this technology.

Smart cards are the technology of choice when fairly large databases must travel with an individual or an object. For instance, a version of smart card technology is used to record service histories for automobiles. The data travels on a small tag on the owner’s key ring. It can be reprogrammed, updated and accessed whenever the vehicle is serviced with any of that company’s dealers.

As there is a microprocessor on the card, various methods can be used to prevent access to the information on the card to provide a secure environment. This security has been touted as the main reason that smart cards will replace other card technologies.

The microprocessor type smart card comes in two flavors - the contact version and the contactless version. Both types of card have the microprocessor embedded in the card, the contact version having gold contacts on the surface of the card to provide the electrical connection.

Smart cards are not new, the first patent was filed in France in 1974 and the first cards were used in France in 1982. The technology was rapidly accepted in Europe because the high cost of telecommunications made on-line verification of transactions very expensive. The smart card provided the mechanism to move that verification off line, reducing the cost without sacrificing any of the security. In the United States, telecommunication costs have always been low compared to other countries. This meant that the impetus to implement smart cards has taken longer to reach the momentum needed.

The possible benefits of the acceptance of smart card technology depend on the application in use. However, the ability to move large amounts of data with little or no increase in the security of the data will lead to many new applications being created that we haven’t even begun to think about.

Contactless Smart Card

(See contact smart card). Has many of the same attributes as the contact smart card however, the contactless version of a smart card does not have the gold plated contacts visible on the card. The contactless card uses a technology to pass data between the card and the reader without any physical contact being made. The advantage to this contactless system is there are no contacts to wear out, no chance of an electric shock coming through the contacts and destroying the integrated circuit, and the knowledge that the components are completely embedded in the plastic with no external connections. The disadvantage to this is that there are some limitations to the use of the smart card.

Data Glyphs

A proprietary form of 2D barcode that allows for large amounts of data to be stored in a small space.

Embossed Plastic Cards

After the original metal plate, this became the choice of technology for many applications. Even today there are still applications that rely on this technology. All that is involved is the plastic card which has been embossed using a method of pushing the characters into the plastic. This requires the use of an embossable plastic (PVC etc.)

The data is read by passing a heavy roller across a carbon impregnated paper to get an impression of the embossing.

Hologram

An image recorded using laser light which changes as you move the image. Used on many cards as a form of security as reproduction of the hologram is not easy. Sizes range from a small image to a full card image.

Hybrids

A combination of two or more of the technologies listed here.

Magnetic Stripe

Magnetic stripe technology is everywhere. We use cards with magnetic stripes on them everyday without even thinking about it. The technology has been with us for many years, but there are still many new things going on in the industry.

The first use of magnetic stripes on cards was in the early 1960’s. London Transit Authority installed a magnetic stripe system in the London Underground (UK). By the late 1960’s BART (Bay Area Rapid Transit) (USA) had installed a paper based ticket the same size as the credit cards we use today. This system used a stored value on the magnetic stripe which was read and rewritten every time the card was used.

Credit cards were first issued in 1951, but it wasn’t until the establishment of standards in 1970 that the magnetic stripe became a factor in the use of the cards. Today financial cards all follow the ISO standards to ensure read reliability world wide and along with transit cards constitute the largest users of magnetic stripe cards.

With the advent of new technologies many people have predicted the demise of the magnetic stripe. However, with the investment in the current infrastructure this is not likely to be any time soon. Magnetic stripe technology provides the ideal solution to many aspects of our life. It is very inexpensive and readily adaptable to many functions. The standardization of high coercivity for the financial markets has provided the industry with a new lease on life. This coupled with the advent of the security techniques now available means that many applications can expect to be using magnetic stripe technology for the next ten to twenty years.

Optical Memory Card

Optical memory cards use a technology similar to the one used for music CDs or CD ROMs. A panel of the "gold colored" laser sensitive material is laminated in the card and is used to store the information.

The material is comprised of several layers that react when a laser light is directed at them. The laser burns a tiny hole (2.25 microns in diameter) in the material which can then be sensed by a low power laser during the read cycle. The presence or absence of the burn spot indicates a "one" or a "zero". Because the material is actually burned during the write cycle, the media is a write once read many (WORM) media and the data is non volatile (not lost when power is removed).

The optical card can currently store between 4 and 6.6 MB of data which gives the ability to store graphical images such as photographs, logos, fingerprints, x-rays, etc.. The data is encoded in a linear x-y format and ISO/IEC 11693 and 11694 standards cover the details.

The biggest users of optical technology today are: Medical/Healthcare; Prepaid Debit Cards; Cargo Manifests; Admission Pass Season Tickets; Auto Maintenance records; and Retail Purchase Cards.

PCMCIA

Now called PC Card. A credit card form factor card that has an edge connector and is plugged into computers and computing devices. Various standards exist, for different applications, but primary uses are memory, modems, LAN cards and hard disks.

Secure Magnetics

A form of magnetic stripe that provides a method of securing the data on the magnetic stripe. Several different proprietary methods are available, each using a different method of tying the data on the stripe to a particular physical stripe or card. The Magnetic Stripe session later in the week will include presentations from some of the vendors.

Wiegand

A method of embedding wires into a card. The wires are sensed by a magnetic pulse to provide a binary encodation of data.

The Applications

The applications that use card technologies are many and extremely varied. Here is a short list of applications, though there are probably many more:

  • 2 way CATV and Satellite services

  • Access Control

  • Access to Library Databases

  • Car keys

  • Check Cashing

  • Credit and transaction cards

  • Criminal Records

  • Database Storage

  • Drivers License and registrations

  • Driving Records

  • Electronic "signature" and verification

  • Electronic benefits

  • Electronic currency

  • Electronic Commerce

  • Electronic expense reporting

  • Electronic fare collection

  • Electronic travelers checks

  • Electronic Voting

  • Electronic Purse

  • Eligibility verification and

  • Financial Services

  • Global Acceptance

  • Governmental Records

  • GSM Phones

  • Healthcare

  • Information Security

  • Information Services

  • In-home Entertainment

  • Internet access

  • Loyalty and frequent traveler programs

  • Maintenance History

  • Medical profile

  • Membership cards

  • Military Identification

  • National and Local Identification

  • On-line Services

  • Outside Entertainment Purchases

  • Passport and Official documents

  • Portable phone numbers (GSM etc.)

  • Portfolio management

  • Record storage

  • Secure remote banking Access

  • Single Merchant Incentives

  • Social Services

  • Storage and Management of Information

  • Stored value phone cards

  • Telecommunications

  • Telephone Cards

  • Ticketless Travel

  • Time and Attendance

  • Toll Booth Access

  • Transportation

  • Vending

  • Wireless Communications

  • Work-in-process

MARKETS

APPLICATION AREAS

Government

Citizen ID cards
Advanced driver's licence registration
Voter registration cards

Financial Services

Electronic money and E-commerce
Secure remote banking access
Electronic signature and verification

Travel and Transportation

Ticketless airline boarding
Tunnel access monitoring
Highway & Bridge toll collection

Telecommunications

Portable phone numbers
Two-way cable television and satellite services
Internet access and payment

HealthCare and Health Insurance

Medical profiles and treatment applications
Health and benefits applications
Hospitals

Education

Administration
Library function and bookstores
Access control

   

APPLICATION OF SMART CARD

MAIN FUNCTION

Access card

Building and door security

Bank card

Transaction processing with banks and financial institutions

Credit or Debit card

Revolving credit/debit accounts, a purchase transaction is deducted directly from bank account

Digital cash

Card is pre-loaded with set dollar values to be deducted at the point of purchase, a good replacement for coins and bank notes

Health card

Stores personal medical history and acts as a key to systems that store detailed information

ID card

For various personal identification purposes such as drivers' licence, citizen ID, student ID, employee ID, visitor ID, etc.

Phone card

Prepaid PIN cards for phone use

Stored Value card

Pre-loaded with set dollar values to be deducted at the point of purchase

Merchant Incentive card

Company frequent purchaser programs for loyal and valued customers

Ticketless Travel card

Repository for ticket and/or voucher

The Statistics

Growth in card use (Machine readable) (units in millions)

Year

MS

Opt

chip

hybrid

85

400

50

10

10

90

800

50

100

10

95

2000

50

600

50

00

3500

100

1750

400

05

4000

150

2500

800

10

5000

300

3000

1600

94 smart card production = $500million

90% are memory only

There are many smart cards in use today throughout the world. In 1993 approximately 330 million cards were produced by the major manufacturers. Of this number only about 12% were true "smart cards", the rest were simple memory cards. This was projected to grow to approximately 580 million cards in 1995 (about 10% being "smart") and 990 million in 1996 (approx. 10% "smart"). Of the cards issued in 1993 approx. 260 million were used in phone systems; 25 million in health applications; and 23 million in banking. The rest were used in various small projects and trials.

What is the average cost of using smart cards?

SMART CARD

MAGNETIC STRIPE

Card

US $1 - $20 (vary with capacity, quantity and level of security logic required)

US $0.35 - $0.65 (vary with energy strength and quantity)

Reader

US $100 plus

US $100 plus

Other

Card layout design

Card layout design

 

Card customization

Card customization

 

Database processing

Database processing

 

Security measures

Security measures

MARKET PROSPECTS IN THE UNITED STATES

Total business volumes 4,000 billion dollars
Total contact payments 3,000 billion dollars
Cash 1,560 billion dollars (52%)
Cards 600 billion dollars (20%)
Checks 840 billion dollars (28%)
Total home payments 1,000 billion dollars
Electronic funds transfers 10 billion dollars (1%)
Checks 990 billion dollars (99%)

The Standards

Standards of JTC 1 / SC 17

  • ISO/IEC 7501-1:1997 Identification cards -- Machine readable travel documents -- Part 1: Machine readable passport

  • ISO/IEC 7501-2:1997 Identification cards -- Machine readable travel documents -- Part 2: Machine readable visa

  • ISO/IEC 7501-3:1997 Identification cards -- Machine readable travel documents -- Part 3: Machine readable official travel documents

  • ISO/IEC 7810:1995 Identification cards -- Physical characteristics

  • ISO/IEC 7811-1:1995 Identification cards -- Recording technique -- Part 1: Embossing

  • ISO/IEC 7811-2:1995 Identification cards -- Recording technique -- Part 2: Magnetic stripe

  • ISO/IEC 7811-3:1995 Identification cards -- Recording technique -- Part 3: Location of embossed characters on ID-1 cards

  • ISO/IEC 7811-4:1995 Identification cards -- Recording technique -- Part 4: Location of read-only magnetic tracks -- Tracks 1 and 2

  • ISO/IEC 7811-5:1995 Identification cards -- Recording technique -- Part 5: Location of read-write magnetic track -- Track 3

  • ISO/IEC 7811-6:1996 Identification cards -- Recording technique -- Part 6: Magnetic stripe -- High coercivity

  • ISO/IEC 7812-1:1993 Identification cards -- Identification of issuers -- Part 1: Numbering system

  • ISO/IEC 7812-2:1993 Identification cards -- Identification of issuers -- Part 2: Application and registration procedures

  • ISO/IEC 7813:1995 Identification cards -- Financial transaction cards

  • ISO 7816-1:1987 Identification cards -- Integrated circuit(s) cards with contacts -- Part 1: Physical characteristics

  • ISO/IEC DIS 7816-1 Identification cards -- Integrated circuit(s) cards with contacts -- Part 1: Physical characteristics (Revision of ISO 7816-1:1987)

  • ISO 7816-2:1988 Identification cards -- Integrated circuit(s) cards with contacts -- Part 2: Dimensions and location of the contacts

  • ISO/IEC DIS 7816-2 Information technology -- Identification cards -- Integrated circuit(s) cards with contacts -- Part 2: Dimensions and location of the contacts (Revision of ISO 7816-2:1988)

  • ISO/IEC 7816-3:1997 Information technology -- Identification cards -- Integrated circuit(s) cards with contacts -- Part 3: Electronic signals and transmission protocols

  • ISO/IEC 7816-4:1995 Information technology -- Identification cards -- Integrated circuit(s) cards with contacts -- Part 4: Interindustry commands for interchange

  • ISO/IEC 7816-5:1994 Identification cards -- Integrated circuit(s) cards with contacts -- Part 5: Numbering system and registration procedure for application identifiers

  • ISO/IEC 7816-6:1996 Identification cards -- Integrated circuit(s) cards with contacts -- Part 6: Interindustry data elements

  • ISO/IEC DIS 7816-7 Information technology -- Identification cards -- Integrated circuit(s) cards with contacts -- Part 7: Interindustry commands for Structured Card Query Language (SCQL)

  • ISO/IEC DIS 7816-8 Identification cards -- Integrated circuit(s) cards with contacts -- Part 8: Security related interindustry commands

  • ISO 8484:1987 Magnetic stripes on savings books

  • ISO/IEC 10373:1993 Identification cards -- Test methods

  • ISO/IEC DIS 10373-1 Identification cards -- Test methods -- Part 1: General characteristics tests

  • ISO/IEC DIS 10373-2 Identification cards -- Test methods -- Part 2: Cards with magnetic stripes

  • ISO/IEC DIS 10373-5 Identification cards -- Test methods -- Part 5: Optical memory cards

  • ISO/IEC 10536-1:1992 Identification cards -- Contactless integrated circuit(s) cards -- Part 1: Physical characteristics

  • ISO/IEC 10536-2:1995 Identification cards -- Contactless integrated circuit(s) cards -- Part 2: Dimensions and location of coupling areas

  • ISO/IEC 10536-3:1996 Identification cards -- Contactless integrated circuit(s) cards -- Part 3: Electronic signals and reset procedures

  • ISO/IEC 11693:1994 Identification cards -- Optical memory cards – General characteristics

  • ISO/IEC 11694-1:1994 Identification cards -- Optical memory cards – Linear recording method -- Part 1: Physical characteristics

  • ISO/IEC 11694-2:1995 Identification cards -- Optical memory cards – Linear recording method -- Part 2: Dimensions and location of the accessible optical area

  • ISO/IEC 11694-3:1995 Identification cards -- Optical memory cards – Linear recording method -- Part 3: Optical properties and characteristics

  • ISO/IEC 11694-4:1996 Identification cards -- Optical memory cards – Linear recording method -- Part 4: Logical data structures

Learn more about standards