While advances in credit cards like “Chip and PIN” technology have greatly reduced card fraud at Point of Sale, the same can not be said for On-line, Catalog or Phone Sales. The anonymous nature of these kinds of transactions make them more attractive to fraudsters. This combined with the fact that Chip and PIN and other new security technologies can’t currently be used over the internet has led to big increase in Card Not Present, or CNP fraud, as it is known in the industry. CNP fraud has been growing every year and now accounts for over 50% of all credit card fraud.

Visa and a company called Emue are piloting a solution to this growing problem. Emue has developed a more secure credit card, that reduces fraud through the use of PIN generated security codes. 

The card holder inputs his PIN on keypad on the back of the card and it generates a number on the card’s back display that replaces the current CVV code located there. No potential fraudster would be able to generate the secure number without the card holder’s PIN. For retailers, the securely generated number proves that the card is present, thereby guaranteeing them an authorization, and likely a lower credit fee for that transaction.

The card is a little bulkier than a traditional credit card, and the battery and display will likely only have a lifespan of about three years, but in a survey done by TNS Global, a research firm, 45% of the 400 respondents said that they would open a new account to get the more secure card, and 65% said they would recommend it to their friends and family.

Four banks are currently doing trials, MBNA in the UK, Cal in Israel, Corner Banca of Switzerland and IW Bank of Italy. Will this lead to the end of CNP fraud? It might. We’ll just have to wait and see how the trials go.

Additional Links:

Emue Website

Finextra - Visa and Emue Technologies deploy cards with built-in one-time password generator

BBC - Credit card code to combat fraud