By allowing customers to access multiple accounts with a single card, the technology represents “the first mobile wallet in the United States,” says Mullen, a former patent attorney and an inventor with more than 150 current and pending patents. “The average person carries four different payment cards. With our technology, they no longer need to.”
But not everyone is sold on Card 2.0 as the industry’s future. Ulzheimer acknowledges that consumers will soon no longer need to carry a wallet full of cards, but he says that’s because eventually they will be able to make payments using smartphones. “Plastic in and of itself is an endangered species,” he says. Mobile-technology companies are currently experimenting with applications that will allow users to access their accounts and use them to pay for purchases by scanning a code on the phone or gadget’s screen. This, according to Jim Schlegel, is the wave of the future: “A day will come when we move completely away from cards to mobile devices. 2G and other plastic-card technologies are stepping stones toward the sort of Shangri-La of mobile-payment technology.”
In the meantime, if consumers are really going to ditch their wallets for one single card (Mullen admits that two cards will be more likely), they’ll want to know that it is secure. According to the Federal Trade Commission, credit card fraud was the second-most common form of reported identity theft in 2010. While cardholders are already protected against losses from unauthorized use of a credit card, unraveling the effects of a lost or stolen card can be a headache for both the holder and his or her bank. Fraud costs the card industry an estimated $8.6 billion per year. It often occurs when a card is physically lost or stolen, but thieves can also steal credit card information to make fraudulent purchases without the actual card. In a process called skimming, fraudsters copy personal credit card information using various electronic devices — photocopiers or removable card swipers, for instance — during an otherwise legitimate transaction; the credit card number can then be used to make illicit purchases even as the card remains in the holder’s wallet.
For now at least, Card 2.0 technology is one step ahead of the crooks. A number of Dynamics cards (the company is partnering with various card companies to launch them) feature a programmable magnetic stripe that provides users with the most stringent security currently available, according to Mullen. Usable at any point-of-sale card reader, the stripe requires that the holder input a security code in order to turn the stripe on and use the card. It also writes a new, unique code into the stripe each time the card is swiped. The code cannot be used for more than one purchase and is therefore worthless to fraudsters if stolen. Additional security options include a programmable security code (the three-digit code on the back of a card that’s typically required for online purchases) and a hidden card-number display that can be unlocked only by the cardholder. Combined, Mullen says that these features will functionally eradicate credit card security fraud not just in the United States but also internationally.
In Europe, many cards are already equipped with a chip that requires a security PIN to be entered before a payment is authorized. That authorization doesn’t occur until the end of the day, however, as opposed to the real-time (a matter of seconds) authentication available in the U.S. That time lag created a risk to vendors and banks that a payment could be denied long after the buyer is gone. Thus, in 2010, Dynamics introduced in Paris a card featuring both a European chip and reprogrammable magnetic-stripe technology that allows for real-time authentication.
As advanced card technology takes root in the Old World, maybe Americans aren’t the only ones who’ll soon be waving farewell to paper cash. Au revoir, euro.
Chris Opfer is an attorney and a freelance writer in New York. His work has appeared in Popular Science, The Village Voice, MLB Insiders Club Draft and The L Magazine.