A MasterCard International official said two security technologies now under consideration could take a huge bite out of credit card fraud, saving banks hundreds of millions of dollars a year.

The two security measures - personal identification numbers (PINs) and "holomagnetic" cards - could eventually prevent 75% to 80% of fraud losses from thefts of cards and account numbers and from fraudulent applications, said Joel S. Lisker, MasterCard's senior vice president of security and risk management.

The holomagnetic technology enables a bank to encode data on a hologram in addition to a credit card's magnetic stripe.

Protection Technologies

"You could potentially wipe out an enormous piece of fraud with these combined technologies," Mr. Lisker said.

PINs and holomagnetic cards are two of a handful of new card fraud-protection technologies under evaluation by MastrerCard and Visa U.S.A.

Mr. Lisker said one or more of the technologies would probably be recommended to MasterCard's board of directors later this year or early next year, for implementation over the following three to five years.

A Vexing Problem

Visa is expected to proceed in roughly tandem with MasterCard, Mr. Lisker said.

Card fraud has proven a vexing problem for all card issuers.

According to The Nilson Report, an industry newsletter in Oxnard, Calif., card fraud losses in the United States totaled $3.82 billion last year, including $2.65 billion from fraudulent bankruptcies by cardholders.

The newsletter said that bank card issuers lost $572 million from card fraud, including stolen cards and account numbers, counterfeit cards, and fraudulent applications.

Two-Pronged Attack

It is these types of fraud that PINs and holomagnetic technology are designed to stop.

Card thieves would be unable to use stolen cards because they would not know the PINs.

Holomagnetics could stop the remaining counterfeiting problem. Concern over the counterfeiting of cards protected by PINs peaked earlier this year when thieves apparently put an ATM in a Connecticut mall and used the machine to record PINs and account numbers as consumers tried to withdraw cash. Holomagnetic cards could stop this type of fraud because there is no known way to copy them even if PINs are obtained, Mr. Lisker said.

The holomagnetic technology MasterCard and Visa U.S.A. are evaluating was developed by American Bank Note Holographics Inc. of Elmsford, N.Y., along with Kurz Co. of Furth, Germany, and Control Module Inc. of Enfield, Conn.

Mr. Lisker said that the holomagnetic cards would probably be at most only slightly more expensive to make than current cards.

But, he noted, ATMs and point of sale authorization devices would have to be refitted to be able to read the data-holograms.

He said the expense might limit installation to merchants at high risk.

Value Is Doubted

Jerome Svigals, an independent consultant and bank card security expert in Redwood City, Calif., said he thought the holomagnetic technology is of dubious value.

Mr. Svigals said thieves would very quickly turn to merchants without the enhanded point of sale terminals.

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