Last week we saw President Obama sign an order that could spell the end for the familiar magnetic stripe that credit card users have learned to love and hate. At least for cards issued by government agencies, the days of quickly swiping to make payments are numbered. The President praised chip-and-PIN technology, which will replace the magnetic stripe on government-issued cards in an attempt to close security breaches.
But although the move from the longstanding magnetic stripe credit card is a big upgrade for US credit cards, it's safe to say that there are other, and perhaps better options available. Although chip-and-PIN technology isn't bad in itself, it has been around since the late nineties.
Since then we have seen the technology needed to steal chip-and-PIN information become dirt cheap and widely available. For example, tiny digital cameras capable of filming your 4 digit PIN entry unnoticed were the stuff of Bond films in the nineties, but can now be picked up at dime stores. The world has moved on, and credit card technologies are moving with them.
In a joint endeavor with Norwegian biometrics company Zwipe, MasterCard ran a pilot project involving customers of Norway's Sparebanken DIN for its fingerprint authentication system, according to a MasterCard press release.
Instead of entering a PIN, cardholders simply use the small on-card scanner to capture their fingerprint and authenticate the contactless transaction. The pilot project in Norway showed positive results, with both card users and merchants stating their appreciation of the new system's ease of use.
In the same report, MasterCard president of enterprise security solutions Ajay Bhalla explained that it is MasterCard's belief that people should be able to identify themselves without having to use passwords or PIN numbers, and that biometric authentication can help to achieve this.
But this MasterCard experiment isn't the only possible alternative to chip-and-PIN. The Japanese electronics manufacturer Hitachi already produces a finger vein scanner that is compatible with PCs. A bright LED and a small camera verify your identity using the pattern of veins underneath your skin, rather than your fingerprint.
Critics point out that the technology used in the Norway pilot was flawed because the card did not contain a temperature sensor to ensure that the print came from a live finger. If the fraudster is particularly uncouth, even a temperature sensor can be fooled. It's safe to say most of us would prefer to lose a few bucks than a finger, an eye or even our lives.
What's more, credit card legislation in the US already limits consumer accountability for fraudulent credit card transactions, which is one reason why many consumers don't see an urgent need to change from the trusted magnetic stripe. So the real savers in the credit card upgrade aren't us card users, but the issuers and merchants who have to cover for us. In 2012, US card issuers lost an estimated $3.4 billion and US merchants lost $1.9 billion to card fraud (Nilson Report statistic).
Because chip-and-PIN is already accepted by many merchants throughout the world, it does provide a good interim solution while technologists and banks develop futuristic technologies. But with mobile wallet payment solutions like Apple Pay already being used to verify contactless credit card payments at the touch of a finger, even the MasterCard fingerprint scanning cards of the future sound somewhat passé.