Magnetic Stripe/Smart Cards, POS: Smart cards are plastic cards, much like credit cards, embedded with memory chips and optional microprocessors in place of magnetic strips applied to the back. The chips allow the card to replace or supplement information which is traditionally contained on the magnetic strip. Smart cards can store user data, as well as contain security features and computational capability.
Smart cards are extremely difficult, if not impossible, to forge because of the embedded micro- processor's ability to generate its own code. Thus smart cards enhance the security of financial transactions such as are required in the banking and retail industries.
While smart cards are secure, they also have intelligence and storage capacity. A smart card can be disposable or reusable and has many applications, including access control and identification; automatic fare collection for buses, trains and airline travel; industrial automation applications in asset tracking, warehouse inventory control, facilities and equipment management and manufacturing automation; financial transactions in banking; and electronic purse applications in retail stores.
Smart cards used in these applications provide secure, speedy transaction processing and also may gather demographic and product loyalty information. This ability to gather data provides a tool for a business to use to better understand and service their customers. It also provides co-branding opportunities.
Driven by the need to serve customers at the location of the sale or transaction, many sectors of the economy have embraced point-of-sale (POS) technologies. In fact, POS technology is so commonplace it is seemingly transparent to the customer - one expects to have a product scanned in the checkout line or a credit card swiped through a device at a cash register.
A form of POS technology, the automated teller machine (ATM), has been a overwhelming success for twenty years, offering customers an extremely convenient way to get cash, check on their bank balance or pay a bill. It has become a standard service component of the banking industry and an a service that customers expect to be available anytime they want to conduct their banking business.
The associated technologies that support POS include the magnetic stripe card and its readers, bar code scanners, light pens, wand readers and modems. Magnetic stripe cards are a familiar, relatively low-tech device, but one that plays a critical role in millions of daily transactions that support the economy. Credit cards, the mainstay of the magnetic stripe card market, are now necessary to conduct business in today's economy.