What Is a Chip Card?


A chip card, according to Forbes' Investopedia, is a "plastic card that has a computer chip implanted into it that enables the card to preform certain functions." They are used for security access, financial transactions and information storage.

Types of Chip Cards

  • There are three kinds of chip cards: Memory cards, smart cards and super-smart cards. Memory cards have storage capability but cannot do financial processing or security access. Smart cards are great processors and have non-volatile memory capabilities. Super-smart cards are smart cards with displays and key-pads.

Popular Uses of Chip Cards

  • Chip cards are used in a variety of useful ways, such as in driver licenses, bank cards and government Electronic Benefit Transfer cards. Chip cards are also used in cell phones and in satellite TV decoders.

Disadvantages to Chip Cards

  • The main disadvantage to chip cards is the cost of the technology. New devices must be installed in existing terminals to read the chips in the cards. There is also a need for an external drive with input-output abilities.

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