The University card is described in detail on http://www.admin.cam.ac.uk/offices/misd/univcard/. This document will only deal with the use of the smart chip on the card rather than the TDSi Infrared strip or the barcode.
From the above site:
The smart chip is a microprocessor embedded in the card. The chip is able to store a small amount of information and to control the conditions under which the information can be accessed or modified. The chip is also able to perform some cryptographic functions such as creating or checking a digital signature.The primary purpose of the chip is to authenticate the identity of the cardholder. For this purpose, the chip holds a public/private key pair together with a digital certificate. The certificate asserts that the public key on the card belongs to the person associated with a particular identifier; this assertion is made by a Certificate Authority run by the University Card Services. The corresponding private key remains on the card: it cannot normally be extracted, but is used by the card's own cryptographic functions.
The private key on the card is protected by a PIN (personal identification number). PINs are assigned at random when the cards are issued; it may also be possible for individuals to change their PINs at a later date. Cardholders must never reveal their PIN to anyone else, even to members of staff at the card office. If the PIN is entered incorrectly three times in succession, the card becomes 'blocked' and cannot then be used for authentication. The card must then be returned to the card office where it can be 'unblocked' if staff are assured that it is in the hands of the rightful owner.
The University Card uses an IBM MFC 4.22 chip. Technical details on this chip are available at http://vertebra.cbcu.cam.ac.uk/.