Plastic card fraud has grown to alarming proportions; recent statistics estimate losses in the billions of dollars. Fraudulent access to computer files, lost and stolen cards, identity theft, skimming and cloning, to name a few, are burdening the financial services industry and consumers with considerable losses.
X-Card Systems, LLC has been researching credit and debit card fraud for 4 years and subsequently has designed and patented the XCalibur Card, a combination of cutting-edge micro digital electronics and a secure software provisioning platform aimed at eliminating plastic card fraud.
The XCalibur Card is a compilation of modern technological advances. XCalibur is a biometrically controlled electronic device the size of a traditional plastic card, but with many other features that make it a weapon for combating fraud. The device has a screen that displays card information and in the future will support the ability to display personal data such as a driver's license, insurance information, or any other file that the financial institution wishes to provision for the device. A biometric touch sensor controls access to this information in the XCalibur Card, and only the authorized user can initiate activation with the touch of a finger to obtain it.
A dynamic magnetic stripe emulator in the device allows secure data transmission to 20,000,000 point of sale terminals worldwide without concern of fraudulent skimming and cloning. Contact and contactless technology are present on the card through a smart card contact and radio frequency antenna, so these types of point of sale terminals can be utilized securely.
The advantage of the XCalibur Card over traditional plastic cards is that data is secured through on-board biometric technology that is predictable, reliable, and user-friendly. The combination of these payment modalities, i.e., magnetic stripe and contact/contactless, allows the XCalibur Card to function immediately without need for costly changes or upgrades to merchant or processing infrastructure. From a consumer’s point of view, the plastic card transaction process stays the same except for the need to authenticate the activation of the device with the simple touch of a finger.
Despite providing the consumer with a secure point of sale device, theft of transmitted and stored data still remains a threat. X-Card Systems has addressed this "back end" theft of static data by developing and supporting a dynamic access code (DAC). The provisioning platform is a fully operational multi-application system approved by VISA, MC, AMEX, and Discover, functioning in Korea serving 16 million users. IBM created the XCMS Platform and is prepared to fully integrate the functionality of the XCalibur Card, as well as the mobile phone payment initiative, as this market continues to gain traction in the United States.
The deployment of the XCalibur Card is driving forward advances in Point of Sale security. Coupled with provisioning through the XCMS Platform, a secure transactional environment has been developed for the financial service industry. Additionally, the door through which credit unions can enter into the emerging mobile payment market has been opened.
A Credit Union Perspective
All credit unions are under pressure from plastic card fraud and identity theft. Insurance claims, uninsured losses, premiums and deductibles tied to the problem are rising along with reissuance costs and staff commitments to respond to individual and large scale situations. Softer implications are falling member confidence in their institutions and fear-induced reductions in card usage which translates to lower interchange income. X-Card offers the first significant solution to these problems.
According to Rob Givens, CEO of $355 million Mazuma Credit Union in Kansas City, "Our analysis of the X-Card as a production plastic suggests that even the ambitious benefits stated by the promoters could be understated. With extended card issuance cycles and duplicate applications on a single card, the costs to produce plastic should be substantially reduced. Also, with the features of the card, we believe that members would willingly pay a fee that would virtually cover the issuance costs in order to get the security and features of the card. Lower phone call volumes to support the card, fewer disputes and reduced fraud claims would cut staffing costs, and the savings in insurance premiums and fraud losses are potentially huge."
Operationally, having a single piece of plastic for debit, credit, ATM and other applications is a real plus. With the enhanced security features, it should be a Member’s card of choice for all transactions which would increase interchange revenue.
Even those benefits are not the perceived highest value proposition. Givens said "We truly feel that the X-Card is a marketplace differentiator for our credit union. This is a product that every demographic would be attracted to. It can be used to command additional product sales from existing members as well as capturing new members who will bring over checking, deposits and loan business in order to participate in the X-Card. While this is still to be validated, we are convinced of the potential."