Editorial Policy

6 Ways Technology is Changing Cards

Rob Berger

May 16, 2013

Although credit cards aren’t morphing as fast as, say, mobile phones, they’ve come a long way since the merchant cards businesses used to offer customers a century ago. And, thanks to security concerns and mobile technology, those changes might accelerate.

Here are six ways that technology is changing how credit cards look — and how you might use them.

1. More advanced security features
Because of the threat of identity theft, security is a big concern with credit cards — and credit card makers have decided to use the best of technology to fight thieves. For example, in 2012, MasterCard in Singapore introduced a card with an LCD display and numeric keypad meant to help secure purchases made by card holders. This feature requires an authentication code for every purchase. With a uniquely generated authentication code, identity thieves will now need more than just the numbers on the card to make unauthorized purchases.

A less sophisticated but more prevalent security feature is called the CCV or “credit card verification” value. You’ve no doubt been asked for the three- or four-digit number on the back of your card. This prevents scammers from using it when all they have is the number on the front.

2. Mobile payment apps
Using a mobile payment system instead of your actual credit card is a product of combined technologies that allow you to use your phone, instead of your card, to make purchases.

To start, you link a payment card to the app. After that, the apps (which include Google Wallet, Isis and Square Wallet) function in different ways. Some rely on near field communication (NFC) technology, which allows your phone to communicate wirelessly with the payment terminal. Others require you to “check in” to a business to temporarily synch your phone with the store’s payment system. Others allow you to generate a QR code or a barcode on your phone’s screen, which the store’s employees can then scan.

3. Unembossed credit cards
You may have noticed many of today’s credit cards have a different look. Manufacturers have embraced the unembossed look to offer better security and service to their clients. This means no more raised numbers and letters on your card. Aside from increasing protection against identity thieves (you can’t make a manual impression of the card), this technology also results in more efficient service. Instead of waiting for days to get your card, you can get it right after completing your application. MasterCard and Visa are two examples of manufacturers that now use the flat card system.

4. Chip-and-PIN smart cards
Although rare in the United States, chip-and-PIN payment card technology is commonplace in Europe. Chip-and-PIN cards use embedded chips as opposed to magnetic stripes. You don’t swipe your card to pay; instead, you insert it into a slot and need to enter a personal identification number. The cards are also tougher for thieves to clone than magnetic stripe cards are. Some “hybrid” cards feature both magnetic stripe technology and the modern embedded chips.

Terminals accepting chip-and-PIN cards are still rare in the U.S. — but the credit card networks are pushing merchants to upgrade in the name of payment security. In 2012, Visa, MasterCard and American Express began offering merchants incentives to do so.

5. Faster ways to pay
PayPass and payWave
are technologies used by MasterCard and Visa, respectively, that can be used when buying items that cost less than $100. The technology can be embedded in cards and even key chains. All that you need to do is tap or wave your card over the terminal and you’re done. You don’t need to enter a PIN or attach your signature. That’s why the technology is often described as “tap and go.”

6. Credit cards go social
Credit card issuers are starting to embrace social media in interesting ways. For example, American Express offers card members special deals and savings if they sync their card with Twitter. AmEx has also launched a free app that allows card members to send and receive money via Facebook. Other card networks and issuers offer customer service via Facebook and Twitter and use social media to break news to their followers about deals and giveaways.

These are just some of the more popular technologies integrated into credit cards. As credit card issuers and app developers continue to think up more ideas for making credit card life easier, you are bound to see more in the coming years.

Guest blogger Rob Berger is the founder of the popular personal finance blog, the Dough Roller.  Founded in 2007, the Dough Roller covers all aspects of personal finance, including credit, debt, investing, real estate and insurance.  Rob is also a contributor at U.S. News, MSN Money, and Business Insider.

You can find him on Twitter, Facebook and Google+.