Smart cards are secure and multifunctional devices that have become the important part of our daily life applications i.e. from finance, transportation, telecommunication to education, entertainment, health care. Increased use of these devices leads to much advancement in the field of smart cards, yet there are some security threats related to smart cards that needed to be explored. In this paper, smart cards applications and its security threats are discussed. The smart cards authentication and data encryption schemes have been surveyed which lead to comparative survey of various works proposed in this area. This survey results in some research issues; and future directions to resolve these issues are defined.