Smart cards are plastic cards embedded with a microchip that can store and process data. They are commonly used for secure transactions, such as in credit cards, debit cards, and identification cards. The microchip allows for encryption and secure communication, making them a popular choice for various applications, including access control and public transportation. These cards can be contact-based, requiring a physical connection to a reader, or contactless, allowing for data transfer through radio frequency identification (RFID) technology. Smart cards enhance security and convenience, making them an essential tool in modern financial and identification systems.