The smart card communicates with outside world with the help of a reader and terminal. The reader is a card accepting device, which consist of a slot into which card may be placed. The reader provides power and establishes a path through which it can communicate with the terminal or host computer. Different kinds of readers are available in the market they may or may not have the intelligence to process data, error detection and correction capabilities if there is some problem or the transmitted data do not compliant with the underlying transport protocol.

Terminals are generally referred to the computers and reader is also one of its components. Some of the commonly seen terminals are that are employed in the stores for the payment and other that are utilized for the transactions at ATM. The terminals may or may not have a reader in built into it as in ATM. The terminals have an added functionality of carrying out complex information processing and the storage capabilities.

The Communication Model

Smart card employs Application Protocol Data Unit (APDUs) for carrying out the communication with the terminals as the computer uses TCP/IP protocol for communicating between two or more than two interconnected computers. The communication is half-duplex, which means the information is sent from the card or terminal one at a time.

An APDU contains either a command or a response message, the smart card waits for a command APDU from the host and then executes and responds to the host computer command message, and this exchange process of information takes place alternatively. The smart card in this communication model acts as passive slave (smart card employs master slave model for communication).