Magazine article American Banker

Anti-Fraud Hypercom Card Doubles Up with Stripe, Chip

Magazine article American Banker

Anti-Fraud Hypercom Card Doubles Up with Stripe, Chip

Article excerpt

Hypercom Inc., the No. 2 terminal manufacturer, will market a smart card that it says will successfully and economically combat credit card fraud. The ChipStripe card, with a magnetic stripe as well as a computer chip, would be an enhancement of the standard credit card at a cost of under $1 per card, said George Wallner, Hypercom chairman and chief of technology.

Hypercom will also offer a smart card reader for under $50 that attaches to any Hypercom terminal manufactured before 1989.

Smart cards' cost, as much as $3 to $5 each, has discouraged widespread adoption in the United States. Magnetic stripe cards cost about 35 cents. In other countries, where fraud is a bigger problem, the technology has sold more readily.

"Out of frustration," said Mr. Wallner, he partnered with chip makers Philips Semiconductor of Germany and Microchip Technology Inc. in Phoenix to create a card that would pay for itself in fraud reduction alone.

Rather than a powerful microprocessor capable of multiple functions, the ChipStripe would contain only the information in the magnetic stripe, plus encryption data for security and possible loyalty programs for merchants.

Like magnetic stripe cards, the ChipStripe card would require on-line authorization.

A $100,000 investment in software to be added to an acquiring bank's server would be necessary to process the new technology, Hypercom said.

Mr. Wallner said such an entry-level approach to chip technology could ease the transition to more advanced programs like the Mondex and Visa Cash stored value cards. …

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