In order to better meet the multi-application needs of financial IC cards across various industries, align with the latest international standards, and promote the integration of financial IC cards with online and mobile payments, the People's Bank of China has actively advanced the development and application of financial IC cards. As part of this effort, the "China Financial Integrated Circuit (IC) Card Specification" was updated and revised, leading to the official release of JR/T 0025-2013, titled "China Financial Integrated Circuit (IC) Card Specification (V3.0)" on February 5, 2013, also known as PBOC3.0. This specification incorporates China’s own cryptographic algorithms—SM2 (asymmetric algorithm), SM3 (hash algorithm), and SM4 (symmetric algorithm)—into the security framework of financial IC cards.
**Overview of the SM Series Algorithms and Their Applications**
The SM series algorithms are a set of commercial cryptographic standards independently developed by China's National Cryptographic Administration. In the context of financial IC cards, SM2 corresponds to RSA, SM3 to SHA-1, and SM4 to 3DES in international cryptographic standards. These algorithms are designed to enhance security and support domestic technological independence.
In early 2012, the People's Bank of China and China UnionPay established the “GUOM J Algorithm†working group to explore the implementation of SM series algorithms within the financial IC card ecosystem. This initiative involved collaboration with domestic chip manufacturers, system developers, POS terminals, and encryption equipment providers. The group conducted comprehensive demonstrations of SM algorithm implementations and transaction tool transformations. The adoption of SM series algorithms in financial IC cards began with the use of domestically produced chips, followed by their integration into key products such as chip cards, POS machines, and encryption devices. Many domestic chip manufacturers have now passed safety certifications from the Bank Card Testing Center, and key products supporting SM algorithms are undergoing or have completed relevant certification processes.
**Current Status of Financial IC Cards and SM Series Algorithm Implementation**
1. **Jinluo IC Card Promotion Achieves Significant Results**
Since the launch of financial IC cards in Hunan Province in 2009, after nearly four years of development, the program has seen remarkable progress in card issuance, infrastructure upgrades, and industrial applications. By May 2013, over 6.8 million cards had been issued, with an average monthly increase of more than 600,000. The acceptance environment for financial IC cards is now fully established. Over 28 non-contact payment terminals were planned for the province, and 21 public transportation applications were signed, covering 12 cities. Financial IC cards have become deeply embedded in public services like social security, healthcare, and transportation, significantly enhancing their social impact and highlighting the growing importance of security.
2. **Financial Information Security Requirements Continue to Rise**
Following the cracking of the MIFARE CLASSIC IC card cryptography in 2009, the industry began transitioning to SM series algorithms. Today, products supporting these algorithms are widely used in high-security sectors such as government, military, universities, and state-owned enterprises.
In 2012, the National Development and Reform Commission issued a notice to implement the 2012 Special Project on Safety IC Cards and Password Applications in the financial sector. This initiative aimed to promote the industrialization of secure IC cards, test key products, revise security standards, and provide special funding for the application of secure IC cards and password technologies. The inclusion of SM series algorithms in PBOC3.0 in early 2013 marked a significant step toward their broader adoption in the financial field.
**Transformation Needs for SM Series Algorithm Application**
Currently, most financial IC cards issued by Chinese banks use foreign chips and international standard algorithms, except for financial social security cards. The transition to SM series algorithms requires a gradual and controlled process to ensure minimal disruption. This includes a phased approach where both international and SM series algorithms coexist during the transformation period, allowing for compatibility and smooth replacement without affecting cardholders or banking operations.
Key areas of transformation include:
1. **CA System Upgrade**
China's authoritative Certification Authority, the China Financial Certification Center (CFCA), is undergoing changes to support SM series algorithms. This involves generating root CA keys and certificates using SM2, along with secure authentication and encryption processes.
2. **Financial IC Card Upgrades**
As a critical part of the transformation, financial IC cards require support from both the chip and card operating system (COS). Dual-algorithm and single-SM-series cards are being developed, with many domestic chip manufacturers already capable of mass-producing dual-algorithm chips. Relevant card vendors have completed COS updates and are undergoing inspections.
3. **Payment System Transformation**
The financial IC card payment system includes card issuing systems, transaction systems, UnionPay switching centers, and industry platforms. Key transformations involve the issuing and transaction systems, including secure authentication interfaces, data management modules, and security verification processes.
Overall, the implementation of SM series algorithms in financial IC cards represents a strategic move toward enhanced security, technological self-reliance, and long-term industry stability.
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