Advantages & Disadvantages of Smart Card Technology

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Smart cards are next generation technology for credit cards, debit cards and other types of cards that rely on magnetic stripes to hold identification information. A smart card looks like any credit card and may still have a magnetic stripe, but it also has a small embedded microchip that contains a tiny computer with the ability to process and store much more data than can be contained on a typical credit card. Smart cards, while providing enhanced security and identification capabilities, add another level of complexity to credit cards and bring both advantages and disadvantages to businesses that adopt them.


  • Advantages of smart cards are that they provide enhanced security for private data, can hold different types of data and keep valuable data safe from deletion or theft. Disadvantages are that they are more expensive due to their complexity and are only compatible with certain smart card readers.

Enhanced Security

Smart cards have a higher level of security than many other types of data storage devices because they contain a computer that can process data directly without requiring a remote connection. The microchips that smart cards contain are individually encrypted, and the data they store is only accessible using a secure key. That makes smart cards a good choice for storing highly confidential data, sensitive information and data that is protected by federal or state law. This protected and highly sensitive data can include everything from credit card numbers and Social Security numbers to tax information and health records.

Different Types of Data Support

Smart cards are capable of storing a wide variety of data types in a wide variety of formats. Smart cards can store financial information, just like credit cards do, but they can also store business information, telephone numbers, frequent contacts and more. This added flexibility makes smart cards a good choice for high volumes of data storage.

Data Integrity

One of the things businesses like most about smart card technology is the integrity of the data the cards contain. Unlike many other forms of data storage, once information is placed on a smart card it is there forever. The information stored on a smart card cannot be erased, deleted or altered. Smart card technology is also safe against electronic interference and magnets. That makes the cards a good choice for storing valuable data that cannot be easily reproduced.

Cost and Compatibility

One of the most significant disadvantages of smart card technology is the cost. Compared to ordinary card readers, smart card readers can be quite costly, and many businesses find that they are not worth the extra money. In addition to the higher cost, smart card readers are not always compatible with all types of smart cards, or even with each other. A number of different smart cards exist, and some of them use proprietary software that is not compatible with other readers.