Say hello to your new little friend.Goodbye, greenbacks. So long, dollar bills. C-notes, we hardly knew ye. American consumers are continuing to turn to plastic as the preferred method of payment, pushing those paper-currency portraits of the country’s forefathers slowly into the realm of obscurity. While cold, hard cash will always come in handy at lemonade stands and Girl Scout Cookie rallies (and in solving presidential trivia questions), new advances in credit/debit-card technology are likely to tip the scales further in favor of electronic payment.
Hailed as next-generation credit cards, the soon-to-be-released Citi 2G cards are the first in a wave of new cards that draw on sophisticated technology to provide customers with increased flexibility and security.
The 2G cards — currently available only though a pilot program that began in November 2010 — are the same size as a regular credit card, but they include a battery-powered microprocessor chip along with a web of electronic circuits that essentially make the cards into paper-thin computers. “The inside of the card is a completely mobile consumer electronic device [with] over 70 electrical components squeezed into one-tenth of a cubic inch of volume,” says Dynamics Inc. CEO Jeff Mullen, whose company designed the 2G.
Two buttons on the front surface of the 2G allow the cardholder to choose whether to pay using regular credit or with Citi rewards points (earned by the holder over time) or cash rewards. A small light on the front of the card indicates the choice selected, and circuits within the card reprogram the information transmitted from the card to the card reader.
This sparkling, newfangled technology is nice, but according to Terry O’Neil, executive vice president at Citi Cards, it’s the result — more flexibility for cardholders in making purchases — that will have consumers scrambling to get their hands on a 2G card. “While the technology that enables Citi 2G cards is incredibly exciting, we are equally excited about what it delivers for our card members: increased functionality, choice and control,” he says.
Both versions of the 2G — the ThankYou 2G Card, which allows the cardholder to access ThankYou reward points in making a purchase, and the Citi Dividend 2G Card, which offers access to cash rewards — will be generally available following the pilot program and a series of in-market tests. For Dynamics Inc., the card represents the tip of the iceberg in credit card technology. “The 2G is just one example of extreme functionality,” Mullen says. “You will see a number of innovations that are just as meaningful introduced through our Card 2.0 platform.” While those innovations will likely make the cards more expensive to produce (Citi declined to provide cost information, citing proprietary concerns), Citi says that the increased cost will not be passed on to cardholders, at least for the time being. The bank is not charging pilot users any fees associated with the card and will decide on eligibility rules following the close of the trial program. John Ulzheimer, president of consumer education for SmartCredit.com, says that may change once the card is released: “Down the road, once you have people quasi-addicted to the card, then you go ahead and increase rates and implement annual fees.”
Costs aside, the card represents a significant step forward. “This is the first in a wave of technological advances that allows consumers to be more proactive about the type of payment that they choose to use for a transaction,” explains Jim Schlegel, senior product manager for ACI Worldwide, a payment-systems company. The 2G is one of several new card features in the works for Dynamics. Founded by Mullen in 2007, the company has already made breakthroughs that not only give cardholders the opportunity to access multiple accounts with one card but also to beef up protection against theft and fraud. Dynamics’ Card 2.0 technology, featured in the 2G and for which the company earned a Best of Innovations award at the 2011 Consumer Electronics Show, is the centerpiece around which Dynamics is developing these innovations.