New Credit Card Fraud Solution Could Be Too Expensive to See Light of Day
Digital security company Verisign has teamed up with Innovative Card Technologies to create an on-card password system that could successfully thwart credit card fraud, especially large-scale credit card number hacks like that recently perpetrated against retailer T.J. Maxx’s parent company. The catch, however, is that the cost to produce such credit and bank cards could be 40 to 60 times more than banks currently pay, making it questionable as to whether the cards could ever find wide acceptance.
Here’s how the cards would work. When a credit card purchase is made (or an ATM withdrawal), the card would create a temporary password that shows up in a window directly on the card. You as the cardholder would type in this password to prove that you are truly holding the card. This would thus stop those who might steal your card number from being able to do anything with it, as they would not be able to generate the temporary password that would actually allow the transaction to be processed. Each time you use the card a new password would be created solely for that one transaction—the password could not be used again, even if someone else were to discover it.
While it sounds like a strong security strategy, the sticking point for wide adoption may be the cost. Banks that used the security technology would likely pay between $10 and $20 for each card issued—today they pay less than 50 cents per card.
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