Magazine article American Banker

Warped Plastic? New Card Reader Irons out Problem

Magazine article American Banker

Warped Plastic? New Card Reader Irons out Problem

Article excerpt

For all those men who put their wallets in their back pants pocket and over time warp their credit cards, there is now a card reader that can literally straighten those cards out so they can be used.

The new reader also hinders fraud and vandalism by preventing people from stuffing cut-up cards or other items in self-service readers at gas pumps or pay phones.

The device on the new readers is called a "fraud ramp" and was developed by American Magnetics, a Cypress, Calif., division of Axiohm Inc. of Ithaca, N.Y. The company has been designing point of sale card readers since 1972, when it developed the first card reader for magnetic stripe cards. The new reader, which takes both magnetic stripe and chip cards, was developed in response to client demand for ways to stop certain types of fraud.

Fraud is actually dropping on a percentage basis, according to Visa U.S.A. In 1992 Visa did U.S. sales of $190.4 billion and showed a net fraud rate of 0.18%. In 2000 its sales had climbed to $810.5 billion and the fraud rate had fallen to 0.07%.

Still, some merchants are more vulnerable than others. Some business customers complained to American Magnetics that people would stick a long, thin piece of plastic into a phone reader, which would bend back into the reader. When a customer inserted a card into the reader slot, the card would ride along on the piece of plastic and get stuck.

The person "will walk away in frustration, and the fraudster will come back with tweezers and take the card," said Jim Johnson, a senior mechanical design engineer for the company and the reader's inventor. The device was patented last month.

Another problem that the reader solves is when vandals shove items like Popsicle sticks or half cards into the readers just for the heck of it. Mr. Johnson said people will sometimes -- for no apparent reason other than to be mischievous -- split a calling card in half once it has expired and stick half the card into the reader slot. …

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