A System That Fingerprints” Mag Stripes Gets a Boost”

A new technology that fights counterfeit card fraud by allowing a sort of “fingerprint” comparison routine based on magnetic stripes is getting its first commercial application with shipments having started within the past few weeks of card-personalization machines enabled with the technology. Kiran Gandhi, vice president for Carson, Calif.-based MagTek Inc., a maker of card readers for ATMs and point-of-sale devices, says DataCard Corp., a Minnetonka, Minn.-based maker of card-personalization systems, has begun shipping DataCard 9000 machines with MagTek's MagnePrint technology. MagnePrint relies on the unique, random patterns in which the constituent particles are arranged on the magnetic stripes applied to payment and ATM cards. Each permanent, non-erasable pattern emits low-level “intrinsic noise,” which the technique quantifies by deriving a 54-byte template that can be stored and attached to each cardholder record held by the issuer. When the card is used, the system generates a 54-byte profile as it reads the card and compares it to the template on record. If a close match occurs, the transaction proceeds; if not, the card is rejected. MagTek argues that criminals who use skimmers, or fake card-acceptance devices that pick up account data at ATMs for later use in counterfeiting cards, can't make a mag stripe that would produce a close enough match with the template. “They would have to duplicate the stripes particle by particle,” says Gandhi. “The equipment doesn't exist today to do that.” Among naturally occurring mag-stripe patterns, he estimates the odds against finding identical matches at 1 in 900 million. The system doesn't look for perfect matches, but rather uses scoring technology to compare stripes that are swiped with the corresponding templates. Scores range from negative one to positive one, with the latter representing a perfect match. An issuer might decide to accept any transaction in which the score meets or exceeds 0.5, for example. With card-personalization machines shipping with the MagnePrint technology, service bureaus and issuers will begin creating payment and ID cards from which templates have been derived and stored. The next challenge for MagTek is to sell its system to ATM and point-of-sale terminal makers. Gandhi says he is in talks with major companies, including POS terminal makers Hypercom and VeriFone and ATM manufacturers Diebold and NCR. He says the cost to add MagnePrint readers as peripherals to ATMs and terminals is about $60 per device, while the cost of modifying processor hosts ranges from $125,000 to $150,000. MagTek, which has been working on the technology for a decade, tested it with MasterCard in Malaysia in 2002, rigging 500 POS terminals with MagnePrint readers and recording more than 104,000 cards from four issuers on file with templates. The system scored 740,503 transactions, with a threshold of 0.5. The false rejection rate, or the rate at which good cards were rejected, was 0.027%. The rate of false acceptance?accepting bad cards?was zero.