New “Dynamic” Smart Card Could Help Prevent Fraud

Alexandra Leslie • May 24, 2018

A French technology company recently unveiled a prototype of a credit card with “dynamic” features cleverly engineered to prevent credit card fraud.

This smart card features an everlasting series of temporary codes in place of the standard CVV security code — effectively devaluing stolen credit card information.

What is it?

This technology, created by Oberthur Technologies, features a lithium-ion battery within the standard 0.76 millimeter-thick credit card. The innovation involves a computer chip located where you would expect to find the CVV code — the three or four digit security code found on the back of most credit cards and on the front of American Express cards.

The lithium-ion, battery-powered mini ink screen that displays the code is engineered to last up to three years, consistently changing the code at a schedule per the cardholder’s request. Engineers have created a mathematical algorithm to alter the numbers regularly, rendering any previous knowledge of the card’s information useless without physical possession of the card.

What is the cost?

Though this new technology is designed to cut down on credit card fraud, it is a costly prevention tool. A standard credit card with a magnetic strip issued in the United States typically costs banks approximately 20 cents. Modern computer chip cards typically go for $1.20 a piece.

However, the cost for banks to replace their cards with Oberthur’s new technology could be steep: the company anticipates selling it’s smart CVV-changing cards for $10 to $20 each.

The company will be urging banks to upgrade their cards, despite the fact the most recent update was only two years prior.

Is it worth it?

Oberthur Technology’s North American President Martin Ferenczi told CNNMoney, “The dynamic CVV will severely cut down on fraud.”

The creators of this card aimed for the advancements of a smartphone in engineering the card’s features. The online shopping experience is fully-transparent, without any need for additional buttons, pop-up windows or plug-ins to install.

Cardholders may continue online shopping without having to update their card information. Online merchants won’t need to adapt their websites either. The ephemeral CVV code serves as a temporary password, which is verified by the cardholder’s bank before each transaction’s close.

For in-store purchases, the card may be swiped, dipped or tapped, much like mobile applications such as Apple Pay or Samsung Pay.

So long as credit criminals don’t hijack the number-changing algorithm that powers the entire fraud prevention service, this premier, innovative technology could be the future of credit cards.

If banks warm up to this new technology, expect to see computer chip changing-CVV credit cards in 2017.

Source: CNNMoney

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Editorial Note: Opinions expressed here are the author's alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

About the Author

Alexandra Leslie

Since receiving Bachelor's degrees in Political Science and Psychology, Alexandra enjoys studying socioeconomic factors in business, behavior and politics. When she isn't gathering intel on the latest trends and experts in business and finance, you can find her at the gym, searching for gluten-free goodies on Pinterest or enjoying a night out with friends.