Veritec Inc. is the latest company to offer a debit card with an "off" switch.
The debit card program manager said the technology behind its Blinx On-Off Smart Toggle Debit Card will give cardholders the ability to switch off the account's transaction functions from a Web browser or smartphone.
Though there is some momentum among U.S. issuers to offer cards with secure chips that use the EMV standard that's more common overseas, that technology is still years away from widespread use. Meantime, companies such as Veritec are designing ways to improve on the poor security built into magnetic stripe cards.
City Bank Texas uses a similar toggle technology from Malauzai Software (see story). The Lubbock-based bank says the feature has been used well in excess of what it expected.
"We added it to our lineup of products with the hopes that it would get used, ... but lo and behold we are seeing toggles in the thousands," says Jim Simpson, City Bank Texas vice president of information technology.
"We are kind of blown away by it, to be honest with you," he says. "And our fraud department, they love it because people are calling in and saying, 'Hey, look, I know this [fraud] is going on in my account, but I have already toggled the card off.'"
These products are also similar to one designed by Diebold Inc. Other approaches to improving the mag-stripe card include MagTek Inc.'s Magneprint system, which recognizes the unique "fingerprint" of each stripe, and Dynamics Inc.'s technology for rewriting a card's stripe with new account numbers.
Compared with some of these options, which require either more expensive cards or modifications to merchants' readers, the on/off switch uses a "traditional form factor of a card without having to change the hardware or software configurations that merchants are using," says Beth Robertson, the director of payments research at Javelin Strategy and Research.
However, it's not clear that most consumers would be willing to proactively switch off their cards if they feel they are already protected well enough by bank policies.
"People know they have zero liability on their debit card, ... so I think it's one of these things where it's probably a good idea. But I don't know how much uptake it will have," says Aaron McPherson, a research manager for payments at IDC Financial Insights in Framingham, Mass.
Debit cards are a new line of business for Veritec, a 30-year-old company that traditionally has focused on secure ID cards. It took Veritec about five years to develop the platform to support the Blinx card, which the company may combine with its ID products. First California Bank of Palm Desert, Calif., issues the Blinx card.
"We are kind of like a proxy bank, and we have to have a sponsor bank to issue the card with us," says Van Thuy Tran, Veritec's executive chair. Besides that, "it's our own card program. We own the processor. We own everything from A to Z."
Besides the on/off function, Blinx card users would also receive real-time transaction alerts.
Diebold launched its Card Lock system in October (see story). This system, part of the vendor's MobiTransact mobile banking platform, allows consumers to switch debit and ATM cards on and off from a mobile device.
The growing options for such services "speaks positively toward the market demand potential," Diebold spokesperson Mike Jacobsen said in an email.
Even as these vendors seek to improve the mag-stripe card, many companies are pushing to make traditional plastic cards obsolete. Besides the push for EMV chips, commonly called "chip-and-PIN" for their most prominent security feature, many companies are promoting payment systems that rely on mobile phones.
Mobile-payment systems can add further security by allowing users to lock both the device and the payment app with a PIN or password. Mobile devices can also use encryption to protect payment data.
However, early mobile-payment projects have encountered their own share of security issues, such as a flaw in Google Inc.'s mobile wallet that allowed users to bypass PIN protection by simply erasing the PIN (see story). Google fixed this flaw shortly after it was made public.
Compared with some of the other options, an on/off switch is "a relatively low-impact way of controlling your card," says Brian Riley, a research director at TowerGroup.
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