As this image shows, an RFID device is embedded in the passport making it "electronic"

From news of the technologically advanced New Zealand passports, to the recent multi-million dollar contract awarded to Vancouver-based Fortress Paper to produce over two million ePassports over the next five years, the shift to electronic passports is happening on a global scale.

What makes ePassports “electronic” is Radio-Frequency Identification (RFID) – a small electronic device embedded in the passport consisting of a small chip and an antenna that allow passport information to be transmitted via radio signals.

Serving the same purpose as a barcode or the magnetic strip on the back of a credit card, an RFID provides a unique identifier for a passport allowing only those who scan the document – like a border guard or an airport attendant – to retrieve the confidential information it holds.

Unlike barcodes and credit cards, however, an RFID device doesn’t need to be scanned at a close proximity and requires no contact with another device.  Some high-frequency RFID devices, like those found in some US passports, can be scanned from up a distance of up to 33 feet.

ePassports contain all the same information as non-electronic passports – name, date of birth, sex, place of birth, nationality, etc – but also have the capability to include biometric information like fingerprint, facial, DNA, and iris recognition. Digital signature technology verifies the authenticity of the data stored on the chip.

As of October 2009, over 79 countries had introduced biometric passports and over 100 million ePassports had been issued globally. With over 70 million new ePassports being issued every year, it is estimated that over the next ten years, most of the 750 million passports currently in use will be replaced by electronic passports.

SOURCES:
http://www.technovelgy.com/ct/Technology-Article.asp Technovelgy.com: “What is RFID?”
http://en.wikipedia.org/wiki/Radio-frequency_identification Wikipedia: “Radio-frequency identification”
http://en.wikipedia.org/wiki/Biometric_passport#New_Zealand Wikipedia: “Biometric passport”
http://globalpapersecurity.com/fortress-paper-announces-epassport-contract-and-an-update-on-the-planned-production-increase-at-its-landqart-mill.htm Global Paper Security: “Fortress Paper Announces ePassport Contract…”

Counterfeiting, creating artificial money for financial gain and deceives others in making them believe that it is real, is as old as money itself. In the past, nations had used counterfeiting as a means of warfare, such as in the War Between the States in the USA in the mid-1800s and the Bernhard Operation in Europe during the Second World War. The idea was to overflow the enemy’s economy with fake banknotes, so that the real value of money was reduced; therefore, attacking the economy and general welfare of a society. Today, counterfeiting of currency impacts the integrity of the financial system, damaging economies and contributing to inflation that impacts the pocket books of consumers and savers worldwide.

Recent developments in photographic, printing, computer technologies, including digital image processing, high-performance colour printers and computer scanners and printers, have made the production of counterfeit money relatively easy, thereby increasing the potential threat. These new realities have driven the need for ever-improving security for the production of banknotes, and also for other secure documents such as passports, identification cards, visa labels cheques, tickets, certificates, transport documents, revenue stamps and brand labels.

The security of a banknote starts with the material upon which it is printed; a security paper possessing the characteristics that render it difficult to copy and that presents hurdles to illegal counterfeiting – a security paper that ensures authenticity. Fortress Paper’s Landqart facility offers solutions to meet these security demands. Landqart in is a leader on the development and production of security paper. Today, Fortress supplies bank note paper to more than 30 countries; including the Swiss Franc, the recognized benchmark for quality and security.

Source – Interpol