In a contact-type smart card, the chip can be recognised by an area of gold-plated contacts about 1 cm² close to the short side of the card. Normally the contact communication is relatively slow (9.6-115.2 kbit/s). There is currently a trend towards implementing USB 1 on these contacts (up to 10 Mbit/s), but there is not yet a final standard.
A second type is the non-contact type called contactless smart card, where the chip communicates with the card reader through wireless technology. The standard for the contactless protocol for smart cards is ISO/IEC 14443 (parts 1-4) from the year 2001. An example of a widely used contactless smartcard is Hong Kong's Octopus card, which predates the ISO/IEC 14443 standard.
Dual-interface (or more) cards do implement contactless and contact interfaces or multiple contactless or contact interfaces, e.g. USB and normal serial protocol.
The applications of smartcards include their use as credit or ATM cards, SIMss for mobile phones, authorization cards for pay television, high security identification and access control cards, public transport tickets, etc. They are suitable for this task, because they are engineered to be tamper resistant.
Smart cards may also be used as electronic wallets. The smart card chip can be loaded with electronic money, which can be used to pay parking meters, vending machines, and merchants. Cryptographic protocols protect the exchange of money between the smart card and the accepting machine. Examples for this are Proton, GeldKarte and Quick.
One problem of smart cards is the failure rate. The plastic card in which the chip is embedded is fairly flexible, and many users are insufficiently careful with their card. Smart cards are often carried in wallets or pockets, which is a fairly harsh environment for a chip. Even a low failure rate of 1% creates significant problems for a bank that has millions of outstanding ATM cards. The reliability improves with contactless-only cards.
See also: Electronic money