Credit card companies have begun to send out credit cards with microchips to help prevent fraud. However, critics of this technology say that these new cards will only stop limited kinds of criminal activities, and they may actually increase others. The microchips won’t help with online transactions, and they also might not help if credit cards get stolen. They will only keep fraudsters from making counterfeit credit cards.
New Technology Might Stop More Credit Card Fraud
There is a newer and more effective alternative to cards with microchips. These new cards come with a battery, computer processor, and even a tiny screen. They work by producing a random code for every transaction. A new code gets produced about once an hour. What’s amazing is that all of this technology has been compressed into a regular-sized credit card. It runs with a battery that is supposed to last for about three years.
Because of the changing code, a thief can’t just write down an expiration date, CVV, and credit card number to use it online. They also won’t be able to make a usable counterfeit to use in a store. Unless credit card thieves can somehow duplicate the algorithm that produces the random code, they should largely be put out of business.
Why doesn’t the credit card industry switch over to this new technology right away? The biggest hurdle is that these cards are more expensive to produce and buy. Right now, traditional cards with a magnetic strip cost pennies. Even the new microchip cards only cost a little over a dollar each.
These new cards are likely to cost between $10 and $20. Banks that have millions of customers may be reluctant to make this investment. A bank with 10 million customers might have to invest over $100 million dollars in the new cards. It’s possible that they could pass on some of this cost to their customers. Some consumers might be willing to spend a modest amount to make sure that their credit and debit cards are safer.
Should Banks Adopt This New Technology?
Some experts don’t think that physical credit cards are the right solution. Right now, mobile phone applications could accomplish the same things as the small processors in these thin credit cards. Since a majority of American adults have smart phones, the credit card of the future might not be a credit card at all. It might be a mobile application that runs on a smart phone. Banks might favor moving totally online over having to invest millions in another kind of