Smart card vendor Gemalto introduced a new credit card capable of generating single use passwords for electronic banking and payment transactions. The card features a small button on its face, which when pressed, produces a one-time, non-reusable code (OTP) that's digitally generated and displayed on a panel built into the card.
The code can be used as a second form of authentication in addition to name and password when a user logs into to an e-banking application or conducts a payment transaction. Such two-factor authentication is considered far more secure than authentication measures that rely on username and password, though even OTPs are not unbreakable.
The Gemalto Ezio credit card is believed to be the first payment card available in the US to feature a built-in OTP generator for protection against fraud. No US banks have signed up for the technology, which means that it could be a while before the cards becomes available to consumers. According to Gemalto, the product is being field tested by a European bank.
Adam Dolby, channel manager for Gemalto in North America, said the company will initially promote the card as a way for banks to provide customers with a convenient two-factor authentication technology for online banking transactions.
Many banks already support the use of dynamic OTPs as a secure second form of authentication. However, customers typically need to use a second device, such as a keyfob, mobile phone or other devices to access the one time code. The Gemalto Ezio card will let users generate the codes using the same card that they would for any payment transaction, he said.
Banks will not need to make major changes to their systems to accommodate the new technology because many banks already support OTP, Dolby said. The new card also won't impose any major changes in the way consumers interact with their banks online, he said.
Banks could simply require customers to append the one-time password to their existing PIN (personal identification number), for instance, and then have a mechanism for authenticating the OTP with Gemalto, he said. The real value of such technology will come when it can be used not only for e-banking transactions, but for any transaction, said Avivah Litan, an analyst with research firm Gartner.
The US lags well behind Europe and other parts of the world in adopting secure payment card technologies such as Chip and PIN, Litan said. One of the reasons has been cost. Chip and PIN cards require users to enter a PIN for every credit card transaction. Accommodating such transactions will require considerable changes to payment terminals and the underlying infrastructure. Chip and PIN cards have a microchip embedded into the card for storing data that is normally stored in the magnetic stripe on the back of credit cards
The continued use of magnetic stripe technologies and single-factor authentication mechanisms have made the US payment industry more vulnerable to attack than many other countries, Litan said. "More and more fraud has begun to migrate here because there is nowhere else to commit it," Litan said. The trend will soon force card issuers to upgrade their payment technologies to make them more secure, she said.
A card similar to the one being introduced by Gemalto in the US is already in use in Europe. The card, from Australian vendor Emue Technologies was first piloted two years ago in Europe by Visa Europe. The Emue card is similar to the one announced by Gemalto this week. However, it also incorporates a tiny 12-button keyboard on the back that allows users to input their PINs to generate the OTP.
In June, credit card issuer Visa approved the broad use of the technology (dubbed Visa CodeSure) in Europe after successful pilots at eight major banks in the UK, Italy, Switzerland, Germany and elsewhere. Visa's approval covers the use of VisaCode sure in Visa-branded debit, credit and prepaid cards. The cards have been cleared for use by Visa in online and phone banking services, for payment transactions and to authenticate access to services such as virtual private networks for corporate card holders.