Security

Debit/credit card fraud: Can smart payment cards prevent it?

Is an intelligent and interactive payment system the answer to debit/credit card fraud? Dynamics, Inc. thinks so. Find out what they are up to.

Is an intelligent and interactive payment system the answer to debit/credit card fraud? Dynamics, Inc. thinks so. Find out what they are up to.

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Current payment-card technology in the United States is low-hanging fruit for criminals. Why? Other countries, of interest to the bad guys are using Chip and PIN systems. Not necessarily the best answer, but more secure than the current magnetic-stripe approach used in the United States.

So why isn't the U.S. converting to Chip and PIN? The cost to replace 60 million magnetic-stripe readers might have something to do with it.

Recently, a company surfaced with a alternative solution. Dynamics, Inc. on September 14 gave a presentation at Demo Fall 2010 (scroll down to the Dynamics, Inc. video) demonstrating how to increase payment-card security and still be economically feasible.

Credit cards on steroids

In the video, founder and CEO Jeff Mullens describes what amounts to a credit card with a built-in computer. Amazingly, it looks like a normal credit card, except for the LEDs and readout.

That means there is some out-there technology going on and I had to learn about it. So, I contacted Jeff Mullen, and he kindly provided the following insight into his company and inventions:

TechRepublic: Dynamics, Inc. was started by you in 2007. Could you give a brief overview of the company? Jeff Mullen: Dynamics, Inc. is focused on engineering next-generation payment solutions. In the U.S. this takes the form of complementing the current magnetic stripe reader acceptance infrastructure. We do this to solve many problems.

One problem we solve, is giving consumers the power of choice at the point-of-sale. Consumers will be able to select options on their cards and have these options communicated to their card issuer via the existing infrastructure. We call this heightened social interaction between a cardholder and their issuer as the Payments 2.0 application space.

TechRepublic: Could you describe Card 2.0 and Electronic Stripe, the two technologies you incorporate in your cards? Jeff Mullen: The Card 2.0 platform is a complete computer architecture that has a processor and a number of sub-circuits for various functions (e.g., power management and control).

The Electronic Stripe technology is the world's first fully-programmable magnetic stripe, meaning the Card 2.0 platform has control of what is written to the magnetic stripe.

TechRepublic: Can you give us an idea as to what it takes to fit 70 components and a battery into a piece of plastic that is less than a millimeter thick. Jeff Mullen: Approximately three years of work from a team of extremely dedicated, disciplined, and focused engineers; a number of confidential partners, and millions of dollars in capital. (If you watch the Demo Fall 2010 video linked above, you will see how the components are physically arranged.) TechRepublic: There are two types of payment cards, MultiAccount and Hidden. Could you describe what each payment card offers? Jeff Mullen: Sure, here are the descriptions we used in the Dynamics Inc. press release: MultiAccount: The device includes two buttons on the face of a card. Next to each button is a printed account number and a light source. The user can select an account by pressing one of the buttons. The card visually indicates the selection by turning ON the light source associated with the selected account.

Then the information associated with the selected account is written to the Electronic Stripe. The card can then be swiped at any current magnetic-stripe reader. The slide below is one example:

Hidden: The device includes five buttons on the face of a card and a thin flexible display. The display hides a portion of a cardholder's payment card number. To turn the device ON, a user must enter a personal unlocking code into the card. If the user enters in the correct unlocking code, the card will then visually display the user's payment card number so that the user can read the number for online transactions.

The Electronic Stripe is then populated with the correct magnetic information so that the card can also be used with magnetic stripe readers. After a period of time, the display turns OFF and the Electronic Stripe erases itself - thus removing all critical payment information from the surface of the card. If the card is lost or stolen, the card is essentially useless. The slide below shows the Hidden card, note the series of buttons used to input the card owner's personal code:

One thing that I would like to reiterate. Mr. Mullen pointed out that both cards are capable of working on the current payment-card scanners. Something that no other solution has been able to accomplish.

TechRepublic: Do you see Card 2.0 technology solving problems not related to security? Jeff Mullen: We solve a number of core-payment problems not related to security. I can't disclose more right now. But, as more information is released, I think everyone will start to realize the power of the Payments 2.0 application space. TechRepublic: Besides payment cards, do you see any other uses for your card technology? Jeff Mullen: Card 2.0 technology is a platform. Dynamics, Inc. will continue to introduce valuable new technologies to card issuers and card holders. That said, there are several other markets in which the platform can provide significant value, for example; security cards, medical cards, and identification cards. Final thoughts

As a security type, I see lots of potential for computerized-payment cards. It could easily become a multi-factor authentication device, verifying a relationship between the card and the card's owner as well as a relationship between the card and the financial institution.

What I'd like to see is a MultiAccount/Hidden combination card, gaining both increased security and convenience. I would like to thank Jeff Mullen for explaining the technology behind Card 2.0 and Electronic Stripe and Melinda Jenkins of Edelman.com for her assistance.

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