USB Authentication in TS

We are looking to allow our clients access to a terminal server to use
a custom application. We want to add security to the login process
through the use of a USB key. I am leery about this solution because I
am not exactly sure how the terminal services session will read the key
prior to allowing the terminal session to begin. Could someone please
help me understand if this is even possible and if so how it works?
Also, any recommended companies to purchase the keys from would be a
great additional help. Thank you for the clarification.