Quite a number of factors contribute to the increasing use of the smart card technology in e-commerce:
1. The declining cost of smart cards. The cost can be as little as HKD10.
2. People have become more concerned about fraudulent transactions surrounding the use of magnetic strip card systems. Smart cards has given a higher level of data security. It is coupled with stronger protection against forgery. Identity theft is critical for secure transactions. The smart card and the system can communicate for authentication. The identity of the cardholder can also be verified by use of a personal identification number (PIN). Using strong cryptography, data contained in the smart card is secure against espionage and tampering during the data transmission process over a network. with the use of a microprocessor. One smart card can manage several applications.
3. Magnetic strip card has low memory capacity. Memory of smart card is 100 times more than that. A great deal of transactional information or data can be gathered for analysis. Data can include demographic pattern and consumption behaviour. Such information can assist sales and marketing activities, especially the concept of target marketing or one-to-one marketing.
4. With the coming of the Internet and the ubiquitous presence of telecommunications facilities, distance or cross-border selling has become more widespread than anytime in the past history. Security in terms of identity authentication has become a major issue of concern.
5. With the strong capabilities of smart card, the use of it in commerce results in higher speed and more convenience in transactions.
6. Smart cards are compatible with portables devices such as PCS mobile phones. It is an ideal instrument for the convergence of telecommunications and personal computers.