I recently read an article about a technology company that the writer said would change the way we use credit cards. It reminded me of the "old days" when the merchant would place the plastic card into a machine which imprinted the credit information on a triplicate receipt (does anyone still use those old things?) with carbon copies. One copy would go to the merchant, one to the credit card company, and one to me. The evolution of the credit card with a magnetic strip made credit cards faster to process, more accurate to use, and unfortunately, more easily used illegally by thieves. Also, the internet has made credit card fraud and theft much easier, since no one sees who buys the items, and no one signs for the sale in a traditional way.
The article writer spoke highly of this small technology company's products. The company makes SmartID's, programmable keycards, and other technological wonders. But, the really groundbreaking technology was the "fob technology available at gas stations." These are the small round or flat things that you attach to your key ring, and pass over a reader to give your information to the gasoline company. You never have to touch anything, sign anything, and a receipt promptly comes out of the pump for your records. Sweet! I myself have used these things to get free coffee at the gas stations by piling up "rewards points" after every purchase. The computer attached to the pump lets me know how many points I have accumulated, and if I have a free cup of coffee or breakfast roll awaiting me in the store. This seems like a wonderful thing, and it makes me very loyal to the stations that have these readers. I will pass by two perfectly good gas stations that don't have these readers to find one that does, in order to get my rewards points.
I have seen these fobs used at Exxon stations to pay for gas purchases at the pump. I don't have one of that kind of fobs. How it works is, you sign up for the service, give the company all your credit info, and the company assigns your fob ID number to your credit card number. Now you don't have to swipe a card anymore! All you do is hold up the fob to the pump's reader, and the pump receiver gets your ID number, and lets you pump a full tank. The total of the sale is sent electronically to the company, and your credit card is charged.
Now, we see the next step in the evolution of the new credit card. In 2005, JP Morgan Chase was the first major credit card company to issue this kind of technology on its Visas and Mastercards. So in theory, all of Chase's 94 million credit cards could have this technology added. Very nice! Now credit card sales can be faster and more accurate. What's not to like?
The benefits to the customer are obvious. Customers love the idea of not having to let the card out of their hands to make a transaction. No shifty waiter at a restaurant could compromise their credit information. As long as they maintain a tight watch on the Visa fob, there would be increased security and more fun associated with credit card purchases.
Security, however, is one of the main concerns surrounding this new credit card technology. In cases of online fraud or credit card theft, the fob would be a benefit, since no numbers or identifying information would be on the fob itself. But the same technology that makes transactions fast and easy could lead to the fobs being used without ID checks or any other verification that the credit card user is actually the owner of the card.
Is that a reason not to migrate to this new technology? I suspect that most people's answer would be "no." Most people I think would prefer the trade-off in some security leaks for the convenience of a quick, hands off transaction that would get them on their way faster. Some would argue that the security problems with the fobs would be no greater than the "old fashioned" credit card with a magnetic strip. Having no problems with demagnetized cards or damaged cards could be two good reasons to switch to the fob.
Time will tell if this technology catches on. We might see the magnetic strip credit card riding off into the sunset in just a few years. Then people will be carrying their credit cards on their key chains, like I carry my reward fob. What a world.