With instances of credit card fraud and other consumer data breaches on the rise, new technologies are sprouting up to reverse the trend in the U.S., the only country right now where card fraud is consistently growing.
Some of the technologies are still in the development stages.. While some credit cards in the U.S. are already embedded with computer chips, other technologies may not be available to the mass market for years.
Credit cards in the U.S. are simple plastic cards with magnetic stripes that store sensitive financial information. It’s relatively easy for fraudsters to steal the data on any given card’s magnetic stripe and to turn it into cash.
“If someone copies a mag stripe, they can easily replicate that data over and over again because it doesn’t change,” Dave Witts of Creditcall, a service provider, told Creditcards.com.
Here are three technologies that promise better security for credit card holders:
Credit and debt cards equipped with computer chips have been the norm in Europe for years. Unlike cards with magnetic stripes, the cards with microchips have a unique code for each individual transaction – making it far tougher for fraudsters who just stole your card to use it and profit from it.
Yet this technology doesn’t prevent data theft from large breaches, such as the breaches earlier this year at Home Depot, Neiman Marcus and Sears. In those cases, the hackers stole credit card data from retailers' existing databases but didn't steal the actual credit cards.
The U.S. is slowly starting to add chips to credit cards and debit cards, although it’s been a challenge to update all the equipment to read them, which is an expensive undertaking. Aite Group, a research and advisory firm, estimates that by the end of 2015, about 70 percent of credit cards and 40 percent of debit cards in the U.S. will carry a computer chip,
There have been several attempts at adding a biometric authentication layer to credit cards. MasterCard has partnered with a startup to create Zwipe MasterCard, one of the world’s first credit cards with biometric authentication.
For security purposes, the fingerprints of the user are stored in the Zwipe Mastercard, so you’re the only person who can use the card. “Your fingerprint is used to authenticate each transaction at a payment terminal,” Forbes reported in October. Security InfoWatch noted in a report that the new payment card offers a level of security beyond that of a chip-based card.
The Zwipe MasterCard will be available in the U.K. next year, but the time frame for availability in the U.S. is unknown.
A team of researchers from The Netherlands has found a secure way to store and protect credit card information – though it’s intellectually beyond the understanding of most mere mortals. Using the power of quantum physics, they’ve created a fraud-proof method that verifies a physical “key” that is virtually impossible to thwart.
Total payment-card fraud losses amounted to $11.3 billion in 2012, with the U.S. accounting for 47 percent of that amount. Reducing fraud saves retailers and financial institutions tremendous amounts of money – and consumers as well, who will save the extra fees hoisted upon them.
“This innovative security measure, known as Quantum-Secure Authentication, can confirm the identity of any person or object, including debit and credit cards, even if essential information [such as the actual physical credit card] has been stolen. It uses the unique quantum properties of light to create a secure question-and-answer (Q&A) exchange that cannot be ‘spoofed’ or copied,” the researchers found.
If your credit card is stolen, the information contained within it cannot be stolen or cloned. As the technology was just recently unveiled, it’s far too soon to know whether it will one day make its way to the U.S.
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