Page 493 - Business Principles and Management

Unit 5

food service, library book checkout, parking meters, copy machines, and campus
computer labs.
Smart cards hold up to 80 times more data than cards with magnetic strips,
and their storage capacity is increasing rapidly. They have the potential to replace
debit, credit, and ATM cards for several reasons. First, because a smart card pro-
vides up-to-the-minute account balances after every transaction, it can reduce
bad debts. Second, because lost or stolen cards cannot be used without personal-
ized verification, the cards can reduce fraud. Uses for smart cards are expected to
expand in the future, including online security protection for purchases made on
the Internet.

CHECKPOINT

How are debit cards and smart cards different from credit cards?

18.1 Assessment

UNDERSTAND MANAGEMENT CONCEPTS
Determine the best answer for each of the following questions.
1. Which of the following is not one of the ways a business can begin
accepting major credit cards?
a. Seek authorization directly from the credit card company.
b. Work with a merchant account provider to be able to accept
several different cards.
c. Establish a credit account with a bank that represents a major
credit card company.
d. All these methods can be used.
2. A credit card associated with a specific organization and offered
to people affiliated with that organizations is a(n) ______ card.
a. co-branded
b. affinity
c. private
d. smart

THINK CRITICALLY
Answer the following questions as completely as possible.
3. Why would a major retailer want to offer its own private credit
card, with the expense of a credit department, and also accept
major credit cards?
4. Why will smart cards likely replace other types of financial
services cards such as credit and debit cards? What problems,
if any, do you see with the widespread use of
smart cards?

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