Issuers in Europe are rolling out payment cards featuring built-in display screens that offer improved security and can provide access to balance information — but there are major hurdles that make it unlikely any banks would offer the technology in the U.S. anytime soon.
MasterCard Inc. announced Friday that a Turkish banking company is planning to offer debit cards with displays that can show a customer's account balance, as of the last time the card was used at a reader connected to the card network.
The cards can also show one-time-use passcodes that can authenticate cardholders when they make online purchases. MasterCard said the screens do not add to the bulk of the payment cards.
MasterCard said the cards are being issued by European banks because some of these advanced functions can be used only by cards that adhere to the EMV Integrated Circuit Card Specifications. No financial companies in the U.S. issue EMV cards to U.S. residents, and only one has announced plans to do so.
"This technology is based on the EMV chip, so obviously the concentration is on EMV regions such as Europe," said Louise Herbert, a business leader for communications for MasterCard Europe.
BNP Paribas SA's Turk Ekonomi Bankasi unit plans to begin issuing the MasterCard cards with built-in displays in July. Initially they will include the one-time-use passcode feature, and the balance-inquiry capability will be available later this year.
Visa Europe also said last week that it would offer cards with display screens and a 12-button keypad, though it did not name a launch bank, and its announcement mentioned only the security use of the displays, not the balance-inquiry feature. Visa Europe did not make an executive available for an interview Friday.
The function that relies on the EMV format is the balance-inquiry feature, Herbert said. This information is stored on the EMV chip within the cards, and is updated every time the card is used at a merchant connected to MasterCard's network.
The chip can store any data MasterCard is willing to put on it, she said. "The EMV chip has a considerable capacity to it."
The authentication element is identical to what is used in key chain fobs offered by many financial companies worldwide to improve online account access. Customers using the card for e-commerce press a section of the card to prompt it to generate a one-time-use code that is necessary to complete the transaction. This code expires quickly, making it difficult for a fraudster to misuse if the code is somehow stolen.
Visa Europe's version requires users to enter a PIN into the card before the one-time-use code is revealed. Visa Europe said it has tested its system with eight banks in Europe, but did not name them.
MasterCard's system uses technology from the Swiss vendor NagraID Security. Visa's system uses technology from the Australian vendor Emue Technologies Pty Ltd.
Herbert would not say whether advances such as the display card would improve the case for bringing EMV to the U.S. "That's a question for the industry as a whole," she said.
Jacob Jegher, a senior analyst at the Boston market research firm Celent, said that the one-time-password display may add security to online transactions, but only until fraudsters turn their attention to breaking it.
"For the moment, it puts the consumers one step ahead of the fraudsters," he said, but "it's only a matter of time before the fraudsters move from their comfort zone to new markets."
Fraudsters already know how to compromise one-time-password tokens by eavesdropping on an online banking session to get access to the code before it expires, Jegher said. He expects there is less risk in e-commerce, since there is less value to compromising an e-commerce account than an online banking account.
Though balance inquiries may be useful to some people, Jegher said they do not provide much of a security benefit. "Most people don't necessarily have an idea of what the account balance is until after the bill arrives," so they may not be able to tell at a glance if their balance reflects any unauthorized charges, he said.