Eastman Kodak Co. has joined bankers in the fight to combat credit card fraud.
At a San Francisco press conference, which was beamed to more than 20 locations across the world Tuesday, the film giant unveiled the Kodak Image Verification System, which will enable credit card issuers to digitally record a picture of the cardholder on the card's magnetic stripe.
Citicorp, which has been aggressive in marketing photos on credit cards, is partnering with Kodak to explore the technology, with which smaller companies have experimented.
Kodak has patented a method of hypercompression that reduces the 140 million bits of digital information in a photo to 400 bits, so it can fit on the magnetic stripe.
"If they can get down to 400 bits, that's beyond state of the art," said John H. Payne, principal of Marathon Systems Research in Minneapolis, which has been experimenting with a similar process.
To further enhance security of the photo cards, Max Elbaz, Kodak's worldwide business manager for transaction imaging, said that 10 bits of the 400 bits of photo information are randomly extracted at the point of sale and sent to the bank with the other card data during the authorization process.
This information is compared to the data on file at the bank. Because it is a random algorithmic pattern, Kodak said, it would be almost impossible to counterfeit, unlike photos on the front of a card, which can be altered.
During the press conference, Mr. Elbaz demonstrated the new technology on an IBM 4694 series cash register.
He said a pilot will begin in a couple of months, with Citibank issuing the enhanced cards in selected areas.
Observers in the banking industry were intrigued by the system, but widespread use faces many hurdles.
"It's very exciting technology," said Richard Lonergan, executive vice president, point of transaction, Visa U.S.A. "Here is one more thing that attacks fraud at the point of sale."
He pointed out, however, nearly all merchants would have to upgrade their terminals, at a minimum adding screens and decompression software, to view the image.
Also, the data would have to be stored on the third track of the magnetic stripe, since the other two are filled. Most terminals only read two tracks.
"Given that we have competing technologies, what should merchants invest in?" Mr. Lonergan asked.
Consumers want fraud protection, said Kodak's Mr. Elbaz, but "fingerprints evoke a sense of criminality, eye scanning brings up health concerns, and PINs are a hassle to remember and are easy to compromise through 'shoulder surfing.' "
Mr. Elbaz contends that upgrading terminals to three-track reading capability is inexpensive. And since merchants periodically refurbish their systems, he said, they could include the new technology.
Kodak said it expects adoption by merchants to take three to five years. IBM already makes high-end cash registers that, like the one used in the demonstration, are equipped with screens and three-track readers. Verifone, the Redwood City, Calif.-based terminal manufacturer, is expected to follow suit once banks embrace the technology.
Kodak is working with Gemplus, the French chip card maker, to apply the technology to smart cards.
The data can also be stored in a bar code on a check for scanning at the point of sale to reduce check fraud.
