A smart card is a small plastic card, about the size of a credit card, containing an embedded microchip that can be programmed to store specific user authentication information. The chip on a smart card can store multiple identification factors of a specific user (i.e. password and fingerprint). When the user swipes his or her card into a smart card reader, the card implements multiple factors of authentication, making the smart card system a viable option for two-factor or multifactor authentication.Smart cards help to eliminate the threat of hackers stealing stored or transmitted information from a computer. The information is processed on the smart card, so it never has to leave the card or be transmitted to another machine.

　　On the downside, only a limited amount of information can be stored on a smart card's small microchip. For that reason, smart card encryption options are limited. Smaller or shorter encryption keys may be necessary, which heightens the chance of data compromise.