In the Consumer Reports June 2011 issue, the article “House of Cards” gives some disquieting information about the outdated security technology employed by American credit card issuers. Three pieces of almost shocking information are:

• Information necessary to complete a transaction stored on American-issued credit cards is virtually unprotected.
• Technology for higher level credit card security exists and is used extensively throughout Europe and Canada
• In general, US credit card issuers have no plans to switch to the enhanced technology in the immediate foreseeable future.

It is surprising and perhaps even shocking that our country, which is a world leader in so many areas, is classed with unindustrialized nations in Africa when it comes to levels of security associated with debit and credit cards.

By 2012, one would be hard-pressed to successfully use a credit card issued in America at a bank in Europe, and they will not be accepted in China by 2015. That is, unless the technology employed on American-issued credit cards changes.

While most of Europe and Canada have embraced EMV (Europay MasterCard® Visa®) technology with its embedded chip that both stores data and transmits data with encryption, American credit cards still feature the magnetic strip that stores all the information necessary to make a transaction without any encryption. While information on a magnetic strip is easy for a criminal to access using a skimmer, the encrypted EMV data is also protected by a unique identifier that can change with every purchase. In addition to the embedded encryption of EMV cards, another level of protection is a required PIN for both credit or debit card use.

If the magnetic strip information is not encrypted, what protection do most American-issued credit cards have?

• Required PIN access numbers
• Limited or Zero liability for credit card fraud
• Rigorous monitoring activity by credit card issuers

Although many American cards require a PIN to complete transactions, the ease with which the magnetic strip information can be stolen makes them an attractive target for thieves. According to the Consumer Reports article, in 2010, 32% of American credit card users reported credit card fraud within the 5 previous years. Much of the fraud is through a process called “skimming” where skimming equipment is installed over or in a terminal such as a gas pump or an ATM. In addition to a skimmer, thieves often also install pinhole video cameras or keypad overlays to capture PIN numbers. Once the information is accessed, it can be used to create a counterfeit card or sold, usually over the internet, to other criminals.

Most American credit card issuers do protect the consumer with limited or zero liability on credit card fraud, but the process of investigation of possible fraud often takes several weeks during which the consumer is on his or her own to cover any financial obligations regardless of what has been stolen out of the account.

Although the magnetic strip is unencrypted, the American credit card issuers assure that they protect consumers by employing sophisticated systems to monitor for fraudulent activity. Chase® card states they have 1,000 personnel responsible to detect fraud. VISA touts their real time fraudulent detection system.

If the technology exists to prevent or greatly deter incidents of credit card fraud, why isn’t the American banking industry rushing to incorporate it? Essentially, the loses incurred due to credit card fraud haven’t hurt enough. According to the “House of Cards” article, merchants cover over 43% of debit card losses and over 50% of credit card losses due to fraud. In addition, merchants have to pay credit card issuers an interchange fee for every completed transaction. Sometimes these fees can be quite high, which is why some businesses don’t accept certain credit cards. Supposedly the reason for assessing the transaction fees is to help defer fraud costs.

Of course, merchants aren’t going to absorb either the fees or the losses. Those costs are passed onto the consumer. The bottom line is that credit card fraud doesn’t affect the banking industry’s bottom line enough – yet.

The cost to switch over to the EMV technology is rather staggering. Consumer Reports estimated that the banking industry expense would be approximately 2.85 billion plus an additional 310 million to install needed technology at ATM terminals. It was also estimated that nationwide merchants would spend 2.64 billion to update their payment transaction technology.

Already, large corporations in America, such as WalMart®, are installing contact and contactless readers while others, such as McDonald’s® and Sears®, are lobbying the banking industry to make the change.

Change is coming. It is inevitable. It is only a matter of time. But the American credit card industry has given no indication of how much time. Meanwhile, American-issued credit card holders would do well to know the physical location of each of their credit cards, monitor closely the charges reported on your monthly statements, be aware of anything suspicious at point of payment terminals, and have a list of your credit cards and each credit card issuer’s customer service numbers so you can easily call to report any suspicious activity on your card.

Better than doubling your pleasure® with Doublemint® gum, US Bank and Visa are set to double their marketability and the ease of use for international travelers as they reveal the FlexPerks Travel Rewards Visa Signature Card’s near field technology (NFT) that includes both Visa’s payWave chip and the EMV® (Europay, VISA, MasterCard®) microprocessor.

Technology now allows chips or microprocessors embedded within credit cards to securely communicate with point of purchase readers using a protected Radio Frequency Identification (RFID) to complete a secure transaction. Within the United States, that technology has been embedded in a chip such as Visa’s payWave or MasterCard’s PayPass systems incorporate. Because the chip contains all information necessary to complete a transaction, just like is stored on your credit card’s magnetic strip, a consumer can tap or wave their credit card within about 4 inches of the secure card reader for purchase amounts of up to $25.

Meanwhile, outside the United States, many countries are using EMV technology with their credit cards and merchant payment readers to allow consumers to quickly conduct transactions of up to $25. Visa Europe projected earlier this month that contactless credit card users in the United Kingdom alone will reach 20 million by 2012. Worldwide, it is estimated over 1 billion people use cards with EMV technology.

For consumers who travel internationally, the FlexPerks Travel Rewards Visa Signature Card making use of both technologies is an incredible benefit, making travel overseas that much more convenient and safe while still being able to use the same credit card (and continue to collect its rewards) for purchases in the States.

Not only are RFID technologies secure, the FlexPerks Travel Rewards Visa Signature Card boasts a zero percent liability for unauthorized transactions. One of the reasons banks, merchants, and credit card issuing companies have touted in developing contactless payments is a desire to help the consumer be more safe than before. As more and more merchants have contactless payment options available, it reduces the chances of large amounts of cash on the premises and increases the number of customers paying with a card. The merchant becomes a less likely target for would-be thieves, protecting the international traveler in doing so.

So whether you are in New York or London, dashing down the street to get a quick breakfast as you begin your day is a possibility. No digging for cash as you stand in a checkout line. After grabbing breakfast, jumping on a bus, the subway, or on the tube to get where you are going can be accomplished with a quick wave of your FlexPerks Travel Rewards Visa Signature Card.

The dual contactless payment chip and EMV microprocessor is currently only available in FlexPerks Travel Rewards Visa Signature Card. However, Visa and Bankcorp are planning on extending the dual technologies to additional cards within the coming year.

The company that developed the world’s most powerful and versatile search engine has teamed with Citi® MasterCard® , accepted world-wide, and Sprint™to put a world of power and choice into the hands of the people.

Google recently announced both the launch of “Google Wallet” in test markets this summer as well as plans for rapid expansion.

The new application is exactly what it’s name implies, a wallet. Its purpose is to make your life simpler and more organized. The Google Wallet application has the ability to store just about everything you would normally find in your wallet or that you would need for checkout at your favorite retail location, and that storage is much more compact and organized. Everything from credit cards to coupons can be stored and accessed through Google Wallet, and plans are that in the future Google Wallet will be doing even more, like storing tickets for sporting events or concerts.

Using your Android™ phone, initially a Nexus S 4G but soon to expand to more phones, it is possible to make purchases wherever MasterCard’s PayPass® technology is accepted by just tapping your phone on the point of sale terminal sensor. Not only is the near field technology (NFC) housed in your Android phone and accessed by the Google Wallet application able to combine and allow you to make purchases, but Google Wallet has the ability to allow you to use coupons, gift cards, and local savings offers. Imagine upon checkout from a retailer, accessing your special offers to receive valuable savings without having to search through a messy pile of paper coupons!

Besides Citi MasterCard, Google Wallet can immediately be used in conjunction with a pre-paid card offered by Google. The company plans to expand the ability to use other credit cards in the near future as more banks are brought on board. This, of course, will mean that even more retailer merchants will accept payments made suing Google Wallet.

Technology is great and sure makes our lives easier, but aren’t there risks involved with storing all your credit card or other sensitive information on your phone. The developers of Google Wallet have built in safety measures that include both an application specific PIN and a separate chip within your Android phone on which your encrypted information is stored. That means memory associated with the Google Wallet application is completely, physically separated from your phone’s memory for items such as contacts, messages, videos, photos, and the like.

Year after year, Google’s addition of exciting new options has continued to take the company way past the status of just being the world’s most powerful search engine. This summer’s addition of “Googling it” with Google Wallet gives you power to take care of purchases, bills, and other financial obligations in the most convenient and flexible way possible so you have more time to relax and enjoy the sunshine.

Some things in life you can count on. Christmas is always on Dec. 25. Grandma always loves to see the grandkids (and sometimes doesn’t mind seeing them go). Girl Scout Cookies have been part of the American way of life for as long as anybody can remember, and with a recent decision, the organization is ensuring they always will be.

When the cute little 1st grader from around the corner knocks on your door this year and asks you to help support her Girl Scout Troop, help her earn a cookie badge, and help her to win the sales contest, the “I don’t have any cash” excuse won’t protect you from those Thin Mints that are calling your name (as if you could say “No” to those big brown eyes and dimples anyway)!

Picture it this way.

“That’s okay, Mrs. Smith. You can use your credit card. We take VISA®, Mastercard®, Discover®, or American Express®,” rattles off little Suzy in the cutest of 1st grade business-woman voices.

Who would have imagined that Girl Scouts sporting iPhones® armed with Intuit®’s GoPayment system and a credit card reader could so easily sabotage your plans to avoid too many boxes of those delectable Samoas finding their way into your house?

“By using cutting-edge technology to help us sell cookies, we are learning the role technology plays in successful business. It’s a good lesson for us to remember when we grow up. Have you tried the Dulce de Leche? If you like carmel, they’re delish.”

No sense in shaking your head to clear your mind; you heard correctly. Trefoils® can be charged to your favorite rewards credit card using Suzy’s iPhone to conduct the digital payment. The transaction is as secure using the GoPayment application as the use of your credit card is at any merchant point of purchase machine.

“Do you need to check your birthday list to see if there’s anyone else you’d like to buy some cookies for? I can wait while you do. Oh, and if you owe someone a ‘Thank You’ note, a really fun thing to do is to send it with some ‘Thanks a Lot™’ cookies because EVERYONE loves Girl Scout Cookies. I bet Mr. Smith would really like to have some Samoas to take to his office, too.”

Boy, this girl is good, and whoever wrote her script also needs some kind of cookie badge. Surely calories don’t count when it’s for a good cause.

Transaction completed! As you turn to go into the house you notice Suzy and her ‘Tagalong® little sister doing ‘Do-si-dos’ down the street as they celebrate what may be the biggest Girl Scout Cookie order in history.

Oh well, just remember all the reward points you racked up on your credit card while you were doing your part to support an American institution!

(By the way, if Suzy hasn’t knocked on your door, you can use your iPhone or Android to find Girl Scout Cookies by downloading the “Cookie Locator” application! Happy eating!)

At the Mobile World Conference (MWC) held in Barcelona, Spain, February 14-17, 2001, MasterCard®, in collaboration with Wireless Dynamics, announced the introduction of secure, contactless payments using an iCarte™ attachment with the iPhone®.

Boasting thousands of attendees hailing from over 200 countries plus nearly 1400 displays featuring the latest technology for mobile devices, and in many cases, the unveiling of new products, MasterCard and Wireless Dynamics, headquartered in Calgary, Alberta, Canada, had the attention of the world as they revealed the pilot program will be launched in Singapore.

MasterCard’s PayPass™ technology will be programmed into the iCarte, an iPhone accessory that has Near Field Communication (NFC) abilities. NFC allows short range, two-way communication between personal electronic devices thereby enabling the exchange of information. The technology developed by the MasterCard and Wireless Dynamics will not only have the ability to authorize mobile payments, but will also allow electronic receipts, coupons, or even tickets to be either downloaded or uploaded.

The iCarte accessory is available for iPhone 3G, iPhone 3GS, or iPhone 4, which was awarded “Best Mobile Device” at the 2001 MWC. The iCarte accessory either connects to the bottom of the iPhone or snaps conveniently to the back of the iPhone. The iCarte’s embedded smart element configured as a MasterCard will essentially turn your iPhone into a secure electronic wallet able to complete transactions on any contactless-enabled point of sale terminal.

MasterCard and iCarte, making life easier and more secure.

A recent trip to the airport caught my interest when an airline customer service agent told me I could just swipe my credit card in their kiosk to print a boarding pass and check baggage. I tried to explain that I was not the one who had actually booked the ticket and that my credit card would be of no use. However, the customer service agent reassured me that by inserting my card into the kiosk reader, the airline would be able to get the information they needed for my flight. This experience led me to investigate exactly what information is contained in the magnetic stripe found on the back of every credit card.

The structure of credit and debit cards that make purchasing everything from plane tickets to groceries so convenient is amazing when you think about it. The magnetic stripe is actually divided into three smaller stripes called “tracks.” These tracks, only 0.110′s  of an inch wide (2.79 mm), are encoded with the information needed for a card reader to allow a card holder to complete a transaction.

Because we are a global economy, the information contained in the magstripe of credit cards must conform to international standards. Afterall, I can fly to Canada or the Far East almost as easily as I can drive across the state in which I live, and I value the ease of being able to use a credit card to purchase souvenirs for my wife and kids without having to hassle with cash and exchange rates.

The standards for each of the three magnetic tracks were developed by different industries: Track one standards were developed by the airline industry; track two standards by the banking industry; and track three standards by the thrift/savings industry. For the most part, tracks one or two are the only tracks point of sale card readers are reading, and the only reason the card reader would read two tracks is for back up – in case one of the tracks has been damaged and is unreadable.

Tracks one and two store very similar information. Both tracks have “housekeeping” characters that indicate the beginning and ending of the sequence code as well as a character to indicate field separation. Both tracks one and two contain the primary account number, which usually (but not always) matches the number on the front of the card.  Both tracks also contain the expiration date of the card, possibly a country code,  and a three digit service code. This code communicates whether the card holder has international privileges or just national privileges, how the card issuer must be contacted for transaction approval, what service privileges the card holder has, and whether or not a PIN is required with those privileges. Service privileges might include the ability to purchase goods and services, to get a cash advance, or to use the card at an ATM. Both tracks one and two have a field for discretionary data, which can include such things as PIN Verification Value or Card Verification Code. Both tracks also have a longitudinal redundancy check, which is a code that verifies the input the card reader has scanned.

Minor differences between the information stored on track one and two include the fact that track one stores alphanumeric code and track two stores only numeric code. Because track one is the only track that allows alphabetical characters, it is the only track that contains the name of the card holder.

Track three is not currently used by any national bank card issuers. There is no standard for the data content and format. Although it doesn’t happen often, if a PIN is stored on a card, it will be found in track 3. Also found on track three can be a country code, currency units, amount authorized and other account restrictions, and possibly subsidiary account information. Some credit cards, those with a narrower magnetic stripe, do not even include track 3.

As I swiped my credit card at the kiosk, the card reader interpreted embedded code and communicated with the computer to verify the name on my reservation. Seconds later, the printer was delivering my boarding pass and baggage claim information. I was on my way. a It’s amazing to think that all because of a bunch of tiny iron-based magnetic particles on the back of my credit card, I could achieve like results standing at any kiosk at any airport in the world.

Tired of carrying so many cards in your wallet and loyalty card on your keychain? With the average consumer carrying nine credit, debit and loyalty cards, a solution has finally arrived with the iCache. The iCache was developed by tech entrepreneur Jonathan Ramici to help slim down our over-stuffed wallets and bulky key chains.

The iCache is a device similar in size to an Apple iPod. The device works by registering all of your credit, debit and loyalty program cards on iCache’s website. You then upload all of your card data onto the actual iCache. To access your stored information, the iCache uses a biometric strip to read your fingerprint to ensure it is the owner accessing the information. After verifying your fingerprint, select the card you wish to use and the iCache will pop out a plastic card with the card’s appropriate information. The information stored on the plastic card is deleted after just one use.

The iCache is universally accepted just like any other credit, debit or loyalty card. The iCache features the ability to function just like any standard card. iCache carriers can use traditional point of sale terminals like a magnetic strip, contactless payment (RFID & NFC) and bar code readers.

Limited availability of the iCache will be available starting in the second quarter of 2008 with wider distribution occurring on the middle of 2008. Although a price for the iCache is being kept secret, other sources say around $99 for the device.

As identity thieves and phishing artists continually intensify their scams to steal and use their victims’ sensitive information; several credit card companies now issue virtual credit card numbers. A virtual credit card is tied to your actual credit card number, but the issuer generates a number only good for a single-use or predetermined dollar amount. For internet users that are apprehensive or want an extra layer of security when shopping online - a virtual credit card number is the ideal solution. These virtual credit card numbers are available on numerous credit card offers from top credit card issuers like: Discover, Bank of America and Citibank.

A virtual credit card number works similar to a gift card, but is accepted by an online retailer depending on which credit cards they accept. So if you have a Visa-branded virtual credit card, you can use that card with any online retailer that accepts Visa credit cards. That retailer will then only have your virtual credit card number on file. If at any time the retailer’s system is comprised by thieves, your virtual credit card number is worthless. Also, credit card issuers do not hold cardholders liable for fraudulent charges made with a virtual credit card.

However, there are some limitations with using a virtual credit card. It is important to know that most virtual credit cards expire within one or two months. So if you choose to get a virtual credit card with a predetermined dollar amount, make sure you use it up completely or the next time you need to make that last-minute purchase online, it just won’t happen. If you are using a single-use card, the number is only good for one transaction. Also, don’t plan on using your virtual card for purchases that require you to show proof of the card like: airline ticket purchases, car rentals, hotel stays, etc. If you try using a virtual number for a reservation like this, your reservation may become as virtual as your virtual credit card.

Next time you’re shopping online or about to make a purchase from an unfamiliar retailer, contact or log on to your credit card issuer’s website and request a virtual credit card number. Doing this will provide an added layer of security to your personal information and ultimately give you peace-of-mind. Many customers are unaware of services like these designed to protect you and your identity against fraud - don’t be one of them. Take advantage of all that your credit card has to offer.