Are Powered Cards the Future of Card-Based Payments?

Are Powered Cards the Future of Card-Based Payments?

Powered cards made the headlines years ago as the future of card-based payments, but increased volume has not happened yet. The question is, why not?

EMV migration has reduced point-of-sale (POS) credit card fraud, but not fraudulent card-not-present shopping. Credit card fraud simply moved online, where anyone can use stolen card data for purchases that only require static credit card numbers. This is where powered cards can be the solution because they have a dynamic CVx code.

“Instead of a printed, static number, the card has a little display for a dynamic-CVM/CVV code, which changes every 10 or 20 minutes,” said Thomas Decker, vice president of business line finance at Linxens and long-time member of the International Card Manufacturers Association.

This card manufacturing technology replaces the static three-digit security code printed on the back of the card. Now there’s a mini screen that displays a code that changes according to an algorithm synchronized with the backend server connected to the POS. For cardholders, it’s a seamless user experience. They do not need a password, nor is there verification by a one-time password (OTP) via email or SMS.

The cardholder enters the code that appears on the back of the card. If the card is stolen, the code rapidly becomes obsolete. Card issuers thus provide a simple, yet highly-secure way to pay online and therefore stay “top of wallet.”

Powered cards with displays can not only generate OTPs, but also provide balance information and other key data. Battery-powered multi-account cards let users load multiple accounts (including credit cards, debit cards and gift cards) onto a single card.

Not all powered cards need an integrated battery. Some rely on an external power source like a reader terminal. For example, a standard POS can power a card either through the ISO/EMV contact plate or via electromagnetic field if it’s enabled for contactless transactions.

Highly secure biometric powered cards verify users through an integrated fingerprint sensor. When a biometric card is used, the sensor captures the fingerprint and compares it with the stored template. If they match, the card is enabled and the transmission authorized. Because the biometric card is autonomous and the terminal only acts as a source of electrical power, this system can be used with existing POS infrastructure without any hardware or software upgrades. Biometric cards also have potential as access control cards in government and high-security corporate settings.

“Today, powered cards are manufactured using a special process that only a few companies in the world possess, and often these companies are not traditional card manufacturers and therefore lack the required security certification and/or do not have access to the markets,” Decker said. “This is one of the main reasons that powered cards are not deployed in high volumes.

“I have been monitoring these products since I joined the card manufacturing industry more than 20 years ago,” Decker continued. “I truly believe that the change toward powered cards is happening now. I have never seen such momentum before, nor have we had companies with such technical capabilities and financial endurance being so committed. Combined with the traction we see from the payment brand and issuer side, I truly believe that now the time has come.”

A full article on powered cards was featured in the April 2018 issue of ICMA’s Card Manufacturing magazine. To read the current issue, click here.

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For three decades, ICMA has represented the interests of the card manufacturing industry—which includes manufacturers, personalizers, issuers and suppliers—as its leading global association.
ICMA maintains several industry-leading training and education programs about card manufacturing for members. These include the Advanced Card Education (ACE) certificate and the web-based Card Industry Training & Education programs, which provide information on key areas of the industry, as well as online tutorials and webinars on specific topics from card industry experts and leading industry suppliers.

ICMA also provides regular industry reports to keep members informed of emerging trends and changing standards. The organization hosts three conferences each year. The main event is the Annual Card Manufacturing & Personalization EXPO and the other two conferences are CardTREX North America and CardTREX Europe.

To learn more about the benefits of ICMA membership, click here.