The magnetic stripe still has pull, even amid some of the most forward-thinking of card industry tekkies.
The Cardtech/Securtech conference drew 7,000 people to Orlando's sprawling convention center this week mainly because of new card technology-semiconductor chips that can be embedded in the plastic. But over and over again, attention turned to what is still the credit card industry's data-encoding standard, the one those smarter cards are supposed to displace.
"The magnetic stripe stood the test of time," said Jerry D. Craft, the credit card industry veteran who is now president of Program Management Corp., Atlanta. "It has embedded itself in network and financial services infrastructures.
"It is hard to imagine that new technologies will not have to jump through the same hoops and get the same kinds of investments before they achieve parity."
Mr. Craft struck the keynote of Cardtech/Securtech's magnetic stripe seminar, one of several specialized topic-tracks during the four-day event. Magnetic stripes have survived on all seven annual Cardtech programs, reflecting their persistence in the real world. They also keep attracting crowds and discussion-and a fair number of vendors scattered on an exhibit floor that has become dominated by smart cards and biometric identification techniques like finger imaging and eye scanning.
At a panel discussion Tuesday with executives of leading smart card manufacturing companies, the magnetic stripe loomed as their common bane. Officials of Gemplus Group, Schlumberger, DataCard Corp., and Bull Group brooked no debate about the inevitability of chips. If they don't happen in banking and in North America, the experts said, they will spread rapidly in other industries and other parts of the world.
Volker Bartholomaei, president of Giesecke & Devrient America Inc., did bow to the power of magnetics, but not so deep as to temper his optimism about chip cards. "The magnetic stripe will be with us a long time," he said in his "last word" at the panel organized by the Smart Card Industry Association, a Cardtech co-sponsor. "We should recognize that and build on that foundation."
But in an ironic turn of events, chip enthusiasm did not seem to drown out magnetic stripe talk as much as at past Cardtechs. It may have been confirmation that the technologies will have to coexist for years to come- for as long as it takes to upgrade all cards and terminal readers.
"I could see a mag stripe-chip hybrid lasting 10, 15 years," said Gary Glickman, president of Phoenix Planning and Evaluation Ltd., a Rockville, Md., consulting firm. "Thirty years," said Stephen Halliday, a leader of the mag-stripe faithful and vice president, technology, of AIM-USA, a trade group for the automated data collection industry.
"I have no problem saying we'll still have magnetic stripes in 2020," he said.
Mr. Glickman pointed out another irony: "The magnetic stripe is in some ways more advanced than chip. It gives you instant access to on-line information. Most smart cards operate off-line." Smart cards first gained acceptance in Europe because telecommunications were relatively poor and costly, and information stored on chips enabled many transactions to be completed without making calls to authorization centers. North America's sophisticated, economical telecommunications gave its credit card indus- try-the largest pool of potential converts to smart cards-little incentive to change.
In the interim, magnetic stripes have become more secure, durable, and reliable. They may not be the literal equal of chips but are good enough to have discouraged U.S. banks from investing in smart cards that cost $3 and up, compared with magnetically encoded cards costing $1 or less.
"There have been tremendous improvements in the stripe, not just technically but in the infrastructure behind it," said Larry Linden, a card technology pioneer and president of Linden Associates. "Assuming high coercivity," he said, referring to production techniques that prevent accidental erasures of magnetic data, "it may get increasingly difficult for smart cards to match the economics."
Though agreeing telecommunications have improved the magnetic stripe's outlook, and not just in the United States, Mr. Craft acknowledged that stripes are "not without demerits" in the areas of security, data capacity, and durability. But the drawbacks are "not overwhelming," and the stripe has the advantage of incumbency.
"We wouldn't be having this discussion if the magnetic stripe had not advanced," he said. "New technologies can handle many different kinds of financial transactions, but many of these transactions don't cry out for new technologies."
But MasterCard International chip development director, Richard Phillimore, said the industry should be striving for "a solution sustainable over the long term."
"The Model T Ford worked well, too," he observed.