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A smart card reader interprets the encoded data on a specialized type of passcard called a smart card. There are two basic types of smart cards and two different types of readers. Contact smart cards transmit data to the reader through interaction with a metal conductive area found on the card. Contactless smart card readers have a very specialized type of radio frequency identifier (RFID) signal that transmits and receives data from the chip without contact.
The original idea for the smart card was developed in 1968, although the patent wasn’t issued until 1982. The technology was slow to take off, mostly due to the cost of creating the cards and difficulties making a smart card reader that could withstand interaction with the public. The technology struggled to get widespread acceptance through the 80s and early 90s.
In the mid-1990s, many European mobile phone manufacturers began using identifier chips based on smart card technology. This helped the technology gain more widespread use. Today, smart card readers are found all over Europe, Japan and China, with some representation in other areas. They are used for activities such as paying for goods and services, accessing public transportation and moving through tollbooths.
A contact smart card reader requires that the card be inserted into the machine. Cards of this type have a gold square that serves as the contact point. The side of the card with the square is inserted into the reader. and the gold foil allows electrical contact with a terminal inside. The actual chip with the information is under the foil. This chip sends and receives any necessary data while the contact is maintained. Generally, when there is no direct contact, both the chip and reader are inactive.
On a contactless smart card reader, the process is less involved. Both the card and the reader have a specialized type of RFID system that allows direct communication without contact. This RFID interaction works in an entirely different manner than standard RFID to safeguard the privacy and security of people carrying this type of card. The signal sent by the reader is very strong, but has a short range. This design allows the terminal to read cards that are still inside protective cases or wallets.
The person using the contactless smart card just has to wave the object holding the card within about 4 inches (10 centimeters) of the reader, and it will connect. In most cases, a contactless smart card reader is in continuous operation. Contactless cards are inactive when not near a terminal.