The New Wave of Credit Cards

Your bank cards are becoming obsolete. Evolving credit card technology is changing the way we use plastic, something that really hasn’t changed for over five decades. Imagine, if you will, a world where you can access two accounts with just one card, or use your rewards points at the register just by pressing a button. Even better, imagine paying for stuff with a wave of your phone. Yes, your phone.

You might not have heard of them yet, but it won’t be long before your bank starts sending you credit card offers built around this new technology. While most companies have credit card apps for mobile phones and user-friendly payment options online, the actual process of sliding and signing to pay hasn’t really progressed until now.

New Credit Card Technology

Financial institutions have been trying to add new bells and whistles to entice and streamline more consumer spending for decades. In 1997, Exxon Mobil launched the Speedpass keychain payment system where customers could just wave a little nub pass a sensor and it would register the sale. The concept spread to fast food chains like McDonald’s and some supermarkets, but failed to catch on.

While the Speedpass itself didn’t revolutionize the industry as hoped, many credit card companies today now offer similar options. Visa, MasterCard, American Express and Chase all offer a contactless payment option for certain credit cards. In fact, Visa has been rumored to be working on enabling its PayWave technology to work on mobile phones.

But if paying for goods and services is becoming that much easier, does that also translate to easier identity theft and credit card fraud? Most of the contactless payment cards and devices are offered the same protection and fraud coverage that normal credit cards provide at the very least.

Credit Card Revolution

What about the actual plastic cards themselves, though? Well, they’re getting a makeover, too. Leading the way is a company by the name of Dynamics, Inc., which develops technology for a new wave of credit cards. The startup was founded in 2007 and has been impressing the financial industry with their pocket-sized devices.

Though only Citi Bank is offering these “Payment 2.0″ cards–which are no bigger than normal credit cards–Dynamics CEO Jeffrey Mullen says other banks are planning to roll their cards out to customers within the next year. Dynamics currently features four types of credit card products to banks and financial institutions.

• Dynamic Credit Card: Protects the user by generating a new unique security code for every transaction, replacing that three or four digit number you find on the back of your card each time.
• Hidden: This card hides a portion of your credit card number and requires you to entire a pin using buttons on the card to unlock them. If your card is lost or stolen, without the pin, it’s rendered useless.
• MultiAccount: Let’s you store two credit or debit accounts on one card and you can choose which one to use by pressing a button. A light indicates which account you’ll be using funds from.
• Redemption: If your bank offers credit card rewards, you can use this card to access those points for a purchase or just charge the transaction to your account. Similar to the MultiAccount card, a button and a light indicates which option you’ve selected.

While these technologically sophisticated cards may be on the rise, it’s still too early to tell if that’s the direction of the industry’s evolution. As with most disruptive  innovations, which change the course of how things are traditionally done, early adapters run the risk of seeing their chosen technology become obsolete.

So if some of these new payment and security features may seem interesting to you, dipping your toe in isn’t a bad idea. Just don’t dive in headfirst.