Want A Payment Card That Reprograms Its Own Mag Stripe? How About No Stripe At All?

With lots of activity in the mobile payment and keyfob space, many have predicted the near-term demise of the rectangular plastic payment card. But at least two vendors are not giving up on wallet payment plastic without a fight.

Last Wednesday (Sept. 15), a Pittsburgh-based vendor called Dynamics unveiled a battery-powered device in the shape of a credit card that is capable of mimicking multiple cards by reprogramming its own magnetic stripe on the fly when the user hits a button to change accounts. Instead of replacing all of the credit cards in a consumer's wallet, this device would instead sharply reduce their number.

This approach is reminiscent of a Japanese trial that, although it involved mobile rather than plastic, used a device that could store the CRM data from 100 retailers.

Meanwhile, First Gulf Bank in the United Arab Emirates on Tuesday (Sept. 21) launched what it calls an Internet credit card: No magnetic stripe, no embossed numbers; just a 3D secure password required to execute each transaction and a text-message alert to confirm it. The intent is for this card to be used only online. It simply wouldn't work in an ATM, and the only way it could work in a brick-and-mortar would be for the associate to key it in.

This is the latest in a series of card experiments to try and address consumers' fears of fraud. But it's not just fraud. Some are worried that sites will either charge more than they originally said or make unauthorized—and oftentimes recurring—charges. These concerns have prompted experimentation with one-time-use cards, where the user sets aside only the dollars he/she intends to spend. If the retailer tries to charge more, the transaction simply won't go through.

We still see the life for rectangular payment as very short—perhaps no more than 15 years, with dramatic reductions in less than 10 years and significant reductions in five years. But creative moves such as we're seeing from Dynamics and First Gulf Bank will be essential to keeping versions of the cards alive beyond the true beginning of mobile payments.