If you've always wondered what a smart card is, here's how to think about it: a smart card, used for authentication, is a mini computer that has a hardware and software component. The hardware component contains a micro chip/integrated circuit (ICC) as a memory card.
Another category of the smart card contains an embedded microprocessor and volatile memory, required for data processing. Regarding software, a smart card has its own operating system, required for communication with it via a card reader. The smart card may also have its own file system.
To Know More, See my Article in devX
http://www.devx.com/security/Article/44279/
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