Gemalto launches credit card with built-in password generator

Similar card was approved for use in Europe; no U.S. banks are signed up yet

Smart card vendor Gemalto introduced a new credit card Wednesday that's capable of generating one-time passwords for electronic banking and payment transactions.

The card, called the Ezio, features a small button that, when pressed, produces a one-time, non-reusable code that's digitally generated and displayed on a panel built into the card.

The code can be used as a second form of authentication, in addition to name and password, when a user logs into to an e-banking application or conducts a payment transaction. Such two-factor authentication is considered far more secure than authentication measures that rely on username and password only, though even one-time passwords are not unbreakable.

Gemalto's Ezio credit card is believed to be the first payment card available in the U.S. to feature a built-in password generator for protection against fraud. No U.S. banks have signed up for the technology, which means that it could be a while before such cards becomes available to consumers. According to Gemalto, the product is being field-tested by a European bank.

Adam Dolby, channel manager for Gemalto in North America, said the company will initially promote the card as a way for banks to provide customers with a convenient two-factor authentication technology for online banking transactions.

Many banks already support the use of dynamic one-time passwords as a secure second form of authentication. However, customers typically need to use a second device, such as a keyfob, mobile phone or other devices to access the one-time code. The Gemalto Ezio card will let users generate the codes using the same card that they would for any payment transaction, he said.

Banks won't need to make major changes to their IT systems to accommodate the new technology because many banks already support one-time passwords, Dolby said. The new card also won't impose any major changes in the way consumers interact with their banks online, he said.

Banks could simply require customers to append one-time passwords to their existing personal identification numbers (PIN), for instance, and then have a mechanism for authenticating the passwords with Gemalto, he said.

The real value of such technology will come when it can be used not only for e-banking transactions, but for any transaction, said Avivah Litan, an analyst at research firm Gartner in Stamford, Conn.

The U.S lags well behind Europe and other parts of the world in adopting secure payment card technologies such as chip-and-PIN systems, Litan said. One of the reasons has been cost. Chip-and-PIN cards require users to enter a PIN for every credit card transaction. Accommodating such transactions would require considerable changes to payment terminals and the underlying infrastructure. Chip-and-PIN cards have microchips embedded in them for storing data that is normally stored in the magnetic stripe on the back of credit cards

The continued use of magnetic stripe technologies and single-factor authentication mechanisms has made the U.S. payment industry more vulnerable to attack than the payment card businesses in many other countries, Litan said.

"More and more fraud has begun to migrate here because there is nowhere else to commit it," Litan said. The trend will soon force card issuers to upgrade their payment technologies to make them more secure, she said.

A card similar to the one being introduced by Gemalto in the U.S. is already in use in Europe. The card, from Australian vendor Emue Technologies was first piloted two years ago in Europe by Visa Europe. The Emue card is similar to the one announced by Gemalto this week. However, it also has a tiny 12-button keyboard on the back that allows users to input their PINs to generate one-time passwords.

In June, credit-card issuer Visa approved the broad use of the technology (dubbed Visa CodeSure) in Europe after successful pilots at eight major banks in the U.K, Italy, Switzerland, Germany and elsewhere. Visa's approval covers the use of Visa CodeSure in Visa-branded debit, credit and prepaid cards. The cards have been cleared for use by Visa in online and phone banking services, for payment transactions and for authenticating access to services such as virtual private networks for corporate card holders.

Jaikumar Vijayan covers data security and privacy issues, financial services security and e-voting for Computerworld. Follow Jaikumar on Twitter at @jaivijayan, or subscribe to Jaikumar's RSS feed . His e-mail address is jvijayan@computerworld.com.

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