A smart card is any card that has an integrated circuit on it. A smart card lacks batteries, as the size of a card is too small to mount all but the smallest of special-purpose batteries, which are currently too expensive. Because it has no power on its own, a smart card must be introduced to a smart card reader to temporarily give it power for the purpose of reading the data contained therein.

The smart card has a variety of applications, including payment cards, identification cards, access-control cards, cards for public transit, insurance cards, and the SIM cards found in cell phones. SIM cards are found in practically every cellular telephone on the market.

When a smart card contains only memory elements, it is called a memory card. Memory cards, usually a bit thicker and smaller than the type of card that fits in your wallet, is often used to store game saves for video game systems like the Sony Playstation.

The chip in a smart card will usually hold several processing elements, some of which will be devoted to security and authentication. Because smart cards are often used in payment systems, preventing fraud is a high priority. The first smart cards were used to pay for telephone calls in France.

All smart cards have some form of electronic memory that can be rewritten by an external card reader. For example, in a payment card, the funds available is sometimes represented on the card itself, and when the card reader interacts with it to perform a transaction, it deducts funds appropriately. On the surface of every smart card is two electrical contacts, through which current flows when the card is inserted into a reader.

The smart card was independently invented and patented by several people throughout the world in the 1970s, when integrated circuits got small enough to fit on something the size of a card. The newest smart cards contain RFID chips, which permits contactless interactions with card readers, rather than having to put a card into a machine for it to be read.

Usually smart cards come with an associated PIN number, which has to be inputted by the user for all but the smallest transactions. This seriously cuts back on fraud.

Smart cards exploded in popularity in the 1990s, and chances are that you have several in your home, even if you aren't explicitly aware of them.