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How Credit Cards Will Change In 2013

Tim Parker

Your credit card may soon be a tech geek's dream. As far as innovations go, credit cards have changed very little since making their way into our hearts (and wallets) in the 1950s. Sure, you could point to the addition of the magnetic strip or that three or four digit security code you have to use when you purchase over the phone or online, but by 21st century standards, that just isn't exciting.

Identity Theft
A recent announcement by MasterCard might change all of that. Two words: LCD screen. For starters, let's establish that identity theft is no laughing matter. Nearly 15 million people in the United States have their identities stolen and used in fraudulent ways every year, with losses reaching $50 billion. That translates to nearly 7% of all adults with an average loss of $3,500. Most of the liability falls on the banks that issue the cards. For that reason, banks have incentive to curb credit card identity theft.

Curbing identify theft is why technology geeks just might love 2013. MasterCard recently unveiled a new 21st century credit card. It works just like any other credit card except that it has an LCD display and numeric keypad built in. This will allow users to generate a one-time authentication code for each purchase they make using the card.

The real value of this technology comes from what banks call "card-not-present transactions." When you make a purchase online or over the phone, all you need is the card number and the three or four digit security code. Since the code appears on the back of the card, it does not change. This means that the identity thief only needs to copy the number to use the card. However, suppose the card generated a unique number for each transaction. Wouldn't this make these card-not-present transactions more secure? That's what card companies are counting on.

Not only does this help to curb identity theft, but also as the technology evolves, the card could give the customer information such as rewards point balances, payment reminders, and other short messages normally found by logging into a website.

That's Not All
Three more words: rewritable magnetic strips. By working with card readers already in stores, these cards could make changes to your card with each transaction. This also increases security as well as allowing you to customize rewards options.

Still not impressed? What if you had to enter a code into your LCD card before the number would even appear? If you enter the wrong code, the card is nothing more than a piece of plastic with LCD display giving you an error code. From the bank's perspective, a stolen card is useless without the code.

The Identity Theft Arms Race
The future for credit cards will be much different from the past. No longer will your card look or act the same. All this is happening because identity thieves are becoming more sophisticated. As banks introduce new credit card technology, identity thieves go to work figuring out how to crack it. Slick new credit cards sure to make technology geeks salivate will eventually be hacked. This will require the development of even newer technology.

For this reason, security experts say that the best high-tech security is still low-tech. Check your online statement regularly. Don't send your credit card information via email, and only shop online with reputable businesses. Report all unknown charges immediately, save all receipts, and if you cannot find your card, report it lost or stolen right away.

The Bottom Line
In the not-so-distant future, your credit card will probably look a lot cooler than it does now. Say goodbye to boring cards with a static logo, a worn-out magnetic strip and a picture of your favorite hockey team on it. Say hello to the card of tomorrow, complete with a numeric keyboard and an LCD display. What could be next? Adding a camera?

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