In the interval before the U.S. broadly adopts the EMV chip card standard or devises more-secure online card-payment technologies, certain vendors are hoping to make some hay.
FiTeq Technologies hopes to fill the void with a battery-powered card it is pitching as a "bridge" technology for issuers to support more-secure transactions online and at the point of sale without requiring merchants to make any changes.
The Tiburon, Calif.-based company harnesses a proprietary technology powered by a tiny battery inside a card that mimics the security benefits of a contactless transaction when a cardholder swipes the card at any payment terminal, including those not yet configured to accept contactless payments.
Each swiped transaction generates a unique cryptogram based on dynamic card data, similar to that of a contactless card transaction, that helps prevent card counterfeiting by blocking the replication of transaction data, Joan Ziegler, the firm's CEO, tells PaymentsSource.
FiTeq's card uses the "EMV 3DES" technology to generate a "transaction specific code" readable by terminals configured to read magnetic stripes, she says. "Each time you swipe the FiTeq card, you get a unique (transaction) number embedded in the magnetic stripe data" that criminals cannot replicate."
Issuers also may configure FiTeq's card to generate a one-time-use, three-digit card verification code cardholders can use to conduct more-secure online transactions.
And the card also contains an EMV chip so issuers may configure it to work in any EMV-capable payment terminal, including those deployed overseas, Ziegler says.
Consumers must press a button each time they swipe the card for a purchase at a U.S. payment terminal, and they must press a separate button to use the online card-verification code, Ziegler explains.
So far no banks have announced plans to issue the card, which has been in development for several months. Ziegler says several are testing it, though she declined to name them.
"Card fraud is a constantly moving target, and we are proposing a card that attacks fraud in a unique way," Ziegler says.
Battery-powered payment cards offering heavier layers of security are not a new or affordable idea for most issuers, but FiTeq's card "costs significantly less than display cards that came out a few years ago," and is a step forward because it combines security enhancements for both point-of-sale and online use, Ziegler says.
Innovative Card Technologies Inc. in 2009 announced the DisplayCard, based on a one-time passcode that enables cardholders to conduct more-secure online transactions. However, such products generally have failed to catch on (see story).
And Toronto-based SecureKey Technologies Inc. in 2010 introduced a plug-in device for home computers that generates a one-time-use code cardholders may use to enhance security for online card transactions (see story).
The earliest generation of such display cards generally cost issuers more than $10 each, Ziegler says. FiTeq's card will cost "under $10," although costs will vary based on the issuer's specifications, she says.
FiTeq's card combines various features of existing enhanced-security card products, she contends.
To develop it, FiTeq licensed technology from Privasys Inc. that supports contactless payments, Ziegler says. Issuers can adapt FiTeq's technology to credit, debit, private-label or gift cards, Ziegler says.
FiTeq designed the card's battery to last "about two years," she says, noting that when consumers press one of the card's buttons to turn it on, the card automatically will switch itself off after a few minutes to save battery life.
FiTeq designed the product for larger banks targeting affluent customers, Ziegler says.
"We think some potential issuers will want the card to protect high-value accounts or people with high credit limits," she says.
Analysts are skeptical about whether enough demand exists for such a complex and potentially costly product.
"One must acknowledge that these 'super cards' could encounter the twin headwinds of high cost and high need for consumer activity" to be feasible, Jim Van Dyke, founder and president of Javelin Strategy & Research, tells PaymentsSource.
Moreover, payment technology is shifting toward mobile devices containing card data instead of cards with separate controls, he notes.
Vendors of cards with independent security controls "have a tough battle ahead," Van Dyke says. "It's not really a fully new idea; it hasn't succeeded yet, and there are considerable headwinds."
Ziegler counters that FiTeq’s card offers an interim option that may be "a very strong companion piece" to emerging mobile-payment offerings.
"Like most new technology, the on-ramps will vary for different audiences," she says.
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