September 12, 2006. Copyright 2006, Graphic News. All rights reserved

Latest weapon in the war on credit card fraud
By Mark Rutter

LONDON, September 12, Graphic News:  Fraudulent use of credit and debit cards is a major problem costing banks and card companies over £1 million every day in the UK alone. As the scams employed by criminals become ever more sophisticated, so the banks are turning to the latest technology for protection. The most recent innovation is a card that can create and display a new authentication code each time it is used for online shopping.
 
Using the code-generating card to buy goods online or for home banking is simple. The cardholder presses a button incorporated into the card to obtain a unique code. This is entered into a computer, along with the card number and a fixed password. After authentication by a secure server, the transaction proceeds as normal. The card looks and feels the same as a conventional card and should last for at least three years or around 16,000 pass code transactions. It also has the potential to display additional information such as bank balance and details of previous transactions.
 
The new card came about after collaboration between a host of companies. SiPix made the wafer-thin electronic paper display screen. This 0.25mm thick flexible layer of plastic film with tiny particles of ÒinkÓ placed on electronic circuitry was incorporated into an ordinary credit card by SmartDisplayer. The next step was to integrate the battery, circuit, display and password-generating chip within the card. This was carried out by Innovative Card Technologies or ÒInCardÓ, a company with previous experience of building additional features into payment cards. It was also responsible for developing the One Time Password or OTP technology, in association with the security and authentication software company nCryptone. The right to combine and manufacture the electronic components of the card is owned by the Swiss company NagraID.
 
Although the card is ready for mass production, the technology has not yet been adopted by any of the banks or card companies. Price is one obstacle to take up, with the card costing US$10 compared with 40 cents for a plain card. However, InCard is talking to several organisations and is hopeful that at least five million of its cards will be in circulation within 18 months. It also has plans to license the technology to other manufacturers.
 
Technology does have a record of reducing card fraud. Chip and PIN cards, which allow shoppers to key in a four-digit PIN instead of signing on paper, were introduced to the UK at the beginning of 2005. By the end of that year, losses due to card fraud had been cut by 13 percent, after large increases over the decade before. Chip and PIN did not stop internet, phone and mail order card fraud however, which actually grew by 21 percent in 2005. Clearly then, there is a market for a code-generating card. But, as in the past, far from giving up, fraudsters would most likely step up their efforts to counter any new security measures. The best that card companies can do is to try to remain one step ahead.
/ENDS