could open a new fron- tier to designers of information systems, distributing processing power directly into the hands of the general public. The smart card is made of a piece of plastic, incorporating an in- tegrated-circuit chip with memory and computational capabilities. The memory is nonvolatile SO it does not lose its contents when power is shut off. The bank issues the card to an account holder, personalizing it with that individual's account number and choice of personal iden- tification number (PIN) and inserting a secret code word associated with the bank. The bank also sets a monthly spending limit for the card. Only a bank official armed with the bank's code word can make or change an authorization, and only someone knowing the card holder's PIN can draw against it. At the point of sale, the card is plugged into a terminal that has a separate customer keypad to protect privacy. The sales amount entered by the sales clerk through the main keyboard is displayed on the customer's keypad, and if it is acceptable, the customer enters his PIN. If this PIN agrees with the one stored inside the card and if the store's terminal has previously been activated by a legitimate store-owner's card, the transaction can proceed. The terminal determines whether the purchase amount, plus the sum of the past month's purchases read from the customer's card, exceed the monthly authorization on the card. If there is enough credit left, the transaction is completed, and the transaction date and amount is written into the customer's card. At the same time the date, amount, and the purchaser's account number are entered into an electronic memory inside the store's ter- THE MEDIUM AND THE MARKET 3 minal. In this "store and forward" terminal attachment mode, an entire transactions file is delivered-daily or at any convenient in- terval-to the store's bank via a dialed telephone line or by physi- cally transporting the memory module to the bank. The bank clears the transactions by the electronic funds transfer (EFT) from the pur- 