Gemalto Combines One-Time Codes, Payments in a Credit Card

Gemalto, a maker of payment cards, said on Wednesday it had developed the first credit card that can generate one-time passwords and also function in point-of-sale devices. The product, which the company calls the Ezio card, is immediately available in commercial quantities in the U.S., though so far no domestic financial institution has adopted it. An unannounced financial institution overseas has begun deploying the Ezio card, Gemalto says.

The new card is the same size and thickness as a credit card, though it has embedded in it a chip as well as a battery and also features on its face a display panel that can show numerical passwords as they are generated by the chip. Cardholders can prompt the card to generate a password by pressing a button the front of the card. Such single-use passwords are considered a form of strong authentication for online payments and banking, as they are good for one transaction only. At the same time, the card features a magnetic stripe for point-of-sale transactions, and can include chips that meet EMV and contactless standards, Gemalto says. EMV is a standard for chip-and-PIN smart card payments.

Up to now, most one-time password generators have been keyfobs, cell phones, or other form factors, rather than cards, as technology developers until recently struggled to fit the necessary batteries and circuitry into a card while keeping it thin enough to swipe through standard payment terminals. Another recently introduced product that has met this test is a card launched by Citigroup Inc. that allows users to press a button to redeem rewards at the point of sale. That card also includes a battery and a chip that can reprogram the card’s mag stripe (Digital Transactions News, Oct. 5).

As potent as the Gemalto product is, it is likely to be limited by its cost. While the company says the Ezio card is intended for mass usage, the card’s cost to banks ranges from $10 to $15 each, depending on volume and also on whether the card includes EMV and contactless capability. By contrast, a standard mag-strip card costs around 50 cents.

That will effectively confine Ezio to small businesses and high-net-worth customers, says George Peabody, director for the emerging-technologies advisory service at Mercator Advisory Group, Maynard, Mass., if banks try to pass on the card’s cost to customers. Small businesses, he says, might be willing to pay a fee for the card, given that they have larger balances to protect. Most consumers, on the other hand, would likely balk at a charge for the card. “It’s hard to see a lot of consumers paying for it unless they’re forced to [by a bank security mandate],” he says.

In other news on Wednesday related to payment card technology, Giesecke & Devrient, another card manufacturer, announced it has now shipped more than 50 million contactless cards to the U.S. It introduced its Convego Air contactless product in 2006. The company says it is the first card maker to exceed 50 million shipments of contactless cards in the U.S. market.