The document discusses smart cards, which resemble credit cards but contain an embedded microprocessor chip. Smart cards can store data and applications, perform computations, and provide strong security features like cryptography. They work by communicating with an external smart card reader via contact or contactless transmission. The reader acts as an intermediary to transfer data between the card and other devices. Smart cards contain an operating system that controls access to data stored on the microchip and can run multiple applications simultaneously. They are commonly used for identity verification, payments, and health/banking applications due to their portability and security.