In this blog post, we will explain the principles and structure of IC cards, how they differ from magnetic stripe cards, their security features, challenges in widespread adoption, and their future potential applications.
There have been numerous news reports on IC cards. If you’ve recently applied for a credit or debit card, there’s a good chance you’ve already received a new card with a gold chip. This is the result of the IC card adoption policy promoted by the Financial Supervisory Service since 2003. IC (Integrated Circuit) cards, which contain an IC chip, are expected to replace existing magnetic stripe cards in the future.
The magnetic strip attached to a magnetic card can be considered a type of computer storage device. In contrast, the integrated circuit in an IC card serves as both a basic unit of a computer and a miniature computer itself. Since multiple components are mounted on a single semiconductor substrate and designed to perform a single function as a whole, while magnetic cards primarily fulfill their original purpose of storing and quickly exchanging information, IC cards are characterized by their ability to perform various functions depending on the design and application of the integrated circuit. For this reason, IC cards are sometimes referred to as smart cards.
Since cards must fundamentally store data, they are equipped with storage devices. The storage devices used in credit cards must be rewritable like magnetic tape and must ensure that data remains intact even if the power supply is interrupted. IC cards are equipped with EEPROM (Electrically Erasable Programmable Read-Only Memory) or flash memory, which possess these characteristics. Compared to magnetic tape, which uses magnetic materials, these storage media are resistant to magnets and magnetic fields and have far superior data storage capacity. Therefore, when equipped with such storage devices, IC cards can perform the functions of traditional magnetic cards.
By adding a processor with computational capabilities, an IC card effectively becomes a computer with a CPU. This processor is essential for the IC card to perform its various functions. Since IC cards currently serve primarily as credit cards, the embedded processor operates primarily to provide security features using encryption software. The addition of a processor gives IC cards superior security compared to magnetic cards.
IC cards are divided into contact and contactless types depending on whether the card makes physical contact with the terminal. Contact cards, typified by credit cards, physically touch the terminal to exchange information via electrical signals, while contactless cards, typified by transit cards, exchange information with the terminal via RF (radio frequency) signals. Because their usage methods differ, there are also differences in the structure of the two cards.
In contact IC cards, the IC chip that exchanges information with the terminal is mounted using the COB (chip on board) method. Contactless IC cards require an antenna around the card to receive RF signals, and since information is exchanged wirelessly, the IC chip is typically placed inside the card and remains hidden. While the fact that contactless cards can retrieve internal information without direct contact with the terminal may be seen as a drawback, they enable short-range wireless communication, resulting in very fast information processing speeds. Conversely, contact cards are somewhat inconvenient to use because they must be inserted into and removed from the terminal, but they have the advantage of being highly resistant to information leaks, much like a password-protected computer.
The Financial Supervisory Service’s rationale for actively promoting contact-type IC cards as the next-generation credit cards lies in this enhanced security. However, while the majority of card users currently possess IC cards, most credit card merchants still use only magnetic stripe card terminals. Consequently, credit card payments are still frequently processed via the magnetic stripe method, and many IC cards are manufactured by adding an IC chip to the magnetic stripe section.
If the same information is stored on both the magnetic strip and the IC chip, the card’s security level remains low as long as the magnetic strip exists. Furthermore, under current policies, merchants are required to bear the cost of IC card terminals, which makes small businesses reluctant to install them.
IC cards currently in production primarily serve as credit cards, transit cards, and access cards. However, IC cards are not merely simple data storage devices like their predecessors. By enhancing storage capacity and designing various functions using processors, IC cards can be used for groundbreaking applications that were unimaginable with older cards. Furthermore, they will make it possible to consolidate the various types of cards in a wallet into a single card, making them much more convenient to use.
