Over the past week, I've been reading a lot about a new credit card technology created by a start-up called Dynamics. The new card is being called CARD 2.0, and it features a magnetic strip that rewrites itself on the fly. All the necessary circuitry, plus digital displays and buttons, fit on a piece of plastic the same size as a standard credit card, and the magnetic stripe works with all standard card readers. It's understandably made quite a media splash, and the founders -- rightly -- took home first prize and the people's choice award at DEMO, a start-up conference in Silicon Valley. They even claim to have a few banks already on the hook to test prototypes.
It sounds like an innovative concept, and it's a great demonstration of technology, but the more I read about it, the more I asked myself, what's the point?
One version of the card is called Hidden because six of the numbers on the card face are replaced by a digital display that is blank by default, so no one can look at your card and read your full credit card number. In this state, the stripe is also erased so that the card is impossible to swipe. To activate the card, there are five buttons above the number where you input a secret PIN, at which point the display lights up with the correct numbers, and the stripe rewrites itself with the data necessary to swipe it.
It's a novel approach, but, at the same time, if anyone steals my credit card and uses it to make fraudulent purchases, I'm not liable for those costs anyway. This is one of the best features of credit cards, since no money ever has to leave my pocket when I've been defrauded; instead I alert my card company and it becomes their problem. Entering a code would be more of a hassle than anything.
Of course, a feature like this could save money for the credit card companies themselves on fraud prevention costs, but it also fails to prevent the main source of fraud today -- phishing and internet scams. There's no reason an unscrupulous email spammer can't trick me into giving the number away, secret PIN or not.
The other version of the card that was announced is called MultiAccount, since it can link to two separate accounts. Rather than a single number, this card actually shows two numbers, each with a button and LED next to it that allow you to choose which account you want to use at any given time. As with Hidden, the magnetic stripe then rewrites itself to account for the change.
My problem with this approach is that I can't think of any reason I would want two accounts on one card. Presumably these cards will be issued by banks, so it's only useful if I carry two credit cards from the same bank, which I don't do. At any given moment, I'm usually carrying three to four credit cards and a debit card, and they all come from separate banks with different features and different rewards programs.
In their presentation, the founders mentioned that one use of this feature could be maintaining a personal credit card account and business credit card account in one device, but I'm not sure I'd like that either. I like to keep the two accounts very separate, mostly to minimize my own stupidity. If I mix them up, it screws up my accounting, and if I worked at a larger company that would also mean dealing with my manager and HR to get the screw-ups fixed. And what if I close my personal account or leave my job? I'd have to trade out the card regardless, so I'd rather just keep them on separate cards.
There are clearly drawbacks from a consumer standpoint, so why would banks want to get involved with something like this? In short, marketing. The credit card hasn't really changed much since its inception -- you can't really beat the elegance and simplicity of a thin, wallet-sized piece of plastic that can be read all over the world -- so banks need any help they can get to differentiate their products.
Remember how cool the Amex Blue Cash looked when it first came out, with the clear plastic and the holographic blue icon? I'm pretty sure I signed up for one on looks alone. That's the same impulse that this product will try to inspire. Your credit card is titanium? Well mine is silicon and copper. So I wouldn't be surprised if the technological prowess behind these cards is soon overshadowed by glitter and flashing lights.
Personally, I'd rather see guys like this investing in technologies that don't require me to carry a plastic card at all.