LEVALLOIS-PERRET, France—The rapid rise of card not present fraud is building a business case for a new type of plastic that its developer claims can reduce online card fraud by 85%.
As CUToday.info has reported, French digital security company Oberthur Technologies has developed a digital display powered by a micro-thin battery. It will change the three or four-digit CVV number on the back of credit and debit cards as often as 72 times every 24 hours. Engineers have managed to squeeze it all into a regular, 0.76 millimeter-thick card.
The card only powers up to change the CVV, and then leaves a static image on the screen using the same technology leveraged by the original Kindles. The postage stamp sized battery is designed to last three years.
Some experts have called the prototype a more complete solution to card fraud than EMV. The dynamic CVV code essentially becomes a temporary password verified by the FI with every transaction, rendering the card useless to anyone who has stolen the cardholder’s credit card number, expiration date and the code on the back.
Merchant Interest
While analysts have also stated that the new technology, which Oberthur calls Motion Code, may also be embraced by merchants dissatisfied with EMV as well as the costs to upgrade, the real value of Motion Code is stopping card not present fraud, which has been rapidly rising since the U.S. embarked on its transition to EMV.
Now that the U.S. market is well into the EMV migration, Philip Andreae, VP of field marketing North America at Oberthur, said issuers are looking for the “next thing.”
“EMV has addressed card present fraud, now the issue is card not present,” said Andreae.
Tokenization has been touted as the next big step in the fraud fight—a strong method to prevent online fraud. But Andreae said Motion Code is an alternative. Where the roadblock to adoption lies, however, according to analysts, is in the cost of the Motion Code plastic. The cards can range from $5 to $12 based on volume, Andreae said. A standard chip card costs from $1-$3 based on volume. The Oberthur card is also a chip card.
“Issuers keep losing more money on card-not-present fraud,” said Andreae. “So they have to weigh the cost of the plastic against the fraud savings. Motion Code can’t stop 100% of online fraud, as that is simply not possible. But we are projecting it will stop 85% of it.”
Andreae also contended that the Motion Code cards, and the unique changing CVV on the back, clearly shows cardholders that the financial institution is concerned about data security—which not only drives loyalty but also top-of-wallet position, he said.
“So when we look at the business case, and a total cost of ownership model, the business benefits are top-of-wallet incremental revenue, fewer fraud cases to manage and fraud savings,” said Andreae.
U.S. Appearance
Motion code has yet to be employed by an issuer in the U.S., but Andreae said he expects that will change this year. He said Motion Code is working well for issuers in France and others around the world.
“We have 19 pilots across the globe,” said Andreae. “In France we are producing Motion Code cards on a daily basis based on consumer demand. Consumers are asking for it.”
Andreae said there is interest from U.S. issuers, suggesting where Motion Code may first make its appearance is among high-Internet-spend cardholders.
“Millennials would be a good target as well,” he said.