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The Texan community bank is using new mobile apps to deliver consumer perks, protect payment cards and tailor content for specific customer segments.
January 18 -
A system from Diebold lets consumers deactivate debit and ATM cards from a mobile device, reactivating them only as needed. This makes stolen card data less valuable, since a card would work only when the legitimate customer permits it to.
August 25
Veritec Inc. is the latest company to offer a debit card with an "off" switch.
The debit card program manager said the technology behind its Blinx On-Off Smart Toggle Debit Card will give cardholders the ability to switch off the account's transaction functions from a Web browser or smartphone.
Though there is some momentum among U.S. issuers to offer cards with secure chips that use the
"We added it to our lineup of products with the hopes that it would get used ... but lo and behold we are seeing toggles in the thousands," says Jim Simpson, City Bank Texas' vice president of information technology.
"We are kind of blown away by it, to be honest with you," he says. "And our fraud department, they love it, because people are calling in and saying, 'Hey, look, I know this [fraud] is going on in my account, but I have already toggled the card off.' "
These products are also similar to one designed by
Compared to some of these options, which require either more expensive cards or modifications to merchants' readers, the on/off switch uses a "traditional form factor of a card without having to change the hardware or software configurations that merchants are using," says Beth Robertson, the director of payments research at Javelin Strategy and Research.
However, it's not clear that most consumers would be willing to proactively switch off their cards if they feel they are already protected well enough by bank policies.
"People know they have zero liability on their debit card ... so I think it's one of these things where it's probably a good idea, but I don't know how much uptake it will have," says Aaron McPherson, a research manager for payments at IDC Financial Insights in Framingham, Mass.
Debit cards are a new line of business for Veritec, a 30-year-old company that has traditionally focused on secure ID cards. It took Veritec about five years to develop the platform to support the Blinx card, which the company may combine with its ID products. The Blinx card is issued by First California Bank of Palm Desert, Calif.
"We are kind of like a proxy bank, and we have to have a sponsor bank to issue the card with us," says Van Thuy Tran, Veritec's executive chair. Besides that, "it's our own card program. We own the processor. We own everything from A-to-Z."
In addition to the on/off function, Blinx card users would also receive real-time transaction alerts.
Diebold launched its Card Lock system in October. This system, part of the vendor's MobiTransact mobile banking platform, allows consumers to switch debit and ATM cards on and off from a mobile device.
The growing options for such services "speaks positively toward the market demand potential," says Diebold spokesman Mike Jacobsen, in an email.
Even as these vendors seek to improve the magnetic-stripe card, many companies are pushing to make traditional plastic cards obsolete. In addition to the push for EMV chips, commonly called "chip-and-PIN" for their most prominent security feature, many companies are promoting payment systems that rely on mobile phones.
Mobile payment systems can add further security by allowing users to lock both the device and the payment app with a PIN or password. Mobile devices can also use encryption to protect payment data.
However, early mobile payment projects have encountered their own share of security issues, such as a flaw in Google Inc.'s mobile wallet that allowed users to
Compared to some of the other options, an on/off switch is "a relatively low-impact way of controlling your card," says Brian Riley, a research director at TowerGroup.
