Are Universal Credit Cards Really More Secure?

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They go by many names: universal cards, smartcards, supercards, all-in-one cards. Whatever you call them, the concept is the same: a single credit-card-sized and styled device that allows you to virtually carry your credit cards — and even gift, rewards and club cards — in one convenient place.

But from a security standpoint, is it safer than just carrying all of those cards around in your wallet? It could all depend on what security measures the all-in-one-provider put in place, experts say.

“Some may argue that … cards behind the universal card are typically stored in the cloud, and any hacker from around the world could possibly access those cards,” Troy Bernard, Director of EMV & emerging payments with CPI Card Group, a Colorado-based provider in payment card production and related services. “Our response is that the all-in-one card provider must protect the stored information by both encrypting it and tokenizing it, rendering that data useless.”

The process of tokenization replaces card numbers with a set of meaningless numbers that couldn’t be used elsewhere.

In addition to protecting the stored data, when a universal card is used to make purchases, the tokenized card information can also be restricted by the environment that it is used in, Bernard explained in an email.

“This is called domain restriction,” Bernard said. For example, a merchant card can be tokenized and domain restricted to only work at their specific stores; anywhere else, the purchase is not authorized.

“Finally, many of these products leverage the mobile phone as a companion to the all-in-one card. The phone can be used to deactivate the universal card if it is lost or stolen, and the geo-location features in the phone can be used to ensure that the proper owner of the card is with the card at time of purchase.”

So the potential safety features are pretty impressive, right? Well, yes and no.

“From the perspective of an issuer, this appears to be risky in that existing compromised cards available on the black market can be uploaded into this device,” Seth Ruden, a senior fraud consultant with Florida-based ACI Worldwide, explained in an email. “With the potential for data from stolen cards uploaded into this device, the potential for abuse is high, so it requires the provider of a universal card to ‘know their customer’ and validate their identities.”

The big concern, he said, is for security professionals, however, because many all-in-one cards are still relying on magnetic stripes, which are becoming obsolete at the point of sale because they are more susceptible to in-store fraud. Known as card skimming, a criminal electronically copies card data and PIN codes entered by consumers, then copies the data on to a counterfeit card.

“Issuers do not want their cards to be used at point of sale with a magnetic stripe anymore, as the stripe is highly susceptible to compromise, where chip-based transactions are not,” Ruden said.

Losing your all-in-one card may be no more painful than losing a traditional credit card if many of the aforementioned security measures are in place.

“If you lose your all-in-one card, you likely still have the physical cards it consolidates in your possession,” Bernard said. “In addition, one only needs to ‘cancel’ the [universal] card and not the many cards that are linked to it.”

Are Universal Cards the Way of the Future?

Many small, and even not-so-small companies have entered the universal card business in the last few years. While companies might be keen to offer the cards, the reality is that consumers have yet to start using them widely, due in part to how quickly mobile payment solutions are spreading.

“I do see universal [cards] to be a way of the future, but not on the magnetic stripe form factor,” Ruden said. “Chip-based transactions are the ‘future present’ so any universal solution will need to integrate this point-of-sale mode, and that’s the specific element that is designed into the chip, to be resistant to being duplicated or counterfeited. Tokenization of the card will be a solution that will have legs … Apple, Android and Samsung are growing payment modes and do provide greater security, offering dynamic tokens that feature security parameters well beyond what exists on the static element of the magnetic stripe.”

Regardless of the payment options you choose — mobile, all-in-one, or good old-fashioned credit cards, you should check your statements regularly for unauthorized charges. If you find any, call your issuer immediately to dispute the fraud and have the card replaced. And, if you ever have reason to believe your personal information was compromised alongside your payment information, keep an eye on your credit. A sudden drop in credit scores, for instance, can be a sign your identity has been stolen. You can monitor your credit by pulling your credit reports for free each year at AnnualCreditReport.com and viewing your credit scores for free each month on Credit.com.

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8 Predictions for 2016: Drones, Mobile Pay & the Internet of Things

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Will 2016 be the year people really start buying things with their phones? The year a hacker finally turns the lights off? Or a self-driving car causes an accident? Maybe, maybe not. Maybe some of these things won’t happen until January 2017 — the 12-month time horizon is pretty arbitrary — but these are the things that are listed in almost every prediction story about the new year.

While it might be silly to talk about 2016 guarantees, New Year’s Eve is always a natural time to think about the future, and the exercise of imagining what troubles we’ll soon confront is certainly worthwhile. So I’m not limiting this year’s predictions to the new calendar. Instead, I’m going to discuss what I think is “coming soon.”

1. Things Vs. People

Everyone is correctly predicting that smart gadgets will soon infiltrate our lives (wired crockpots? Of course!), and few of them will be built to protect privacy or care for security. So our homes will likely be hacked and our privacy may erode. But here’s a remarkable data point from Gartner: The number of devices we need to protect will exceed 200 billion by 2020 — 200 billion! “Wearables, gadgets, sensors and other things on the Internet are creating new connections and exposing new vulnerabilities,” warns McAfee. “Every new product that connects to the Internet faces the full force of today’s threats, and we have a long way to go to keep up with the speed and complexity of attack.”

2. People vs. … Robots?

All that is scary, but the real potential looming problem in the things vs. people conflict is this: the robot workforce. Gartner also predicts that by 2018, more than 3 million workers globally will be supervised by a “robo-boss.” And that same year, nearly half of the fastest-growing companies in the world will have “fewer employees than instances of smart machines.” That’s a polite way of saying you can forget about your job being shipped overseas. Instead, it could be done by a robot soon, unless you can work cheaper than a robot. This conflict is real and arriving much sooner than we expected. If I ran a ride-sharing service, for example, I’d be pushing the limits of self-driving cars as far as I could.

3. Paying by Phone

Adoption rates for mobile payment schemes like Apple Pay have been very slow — but that’s temporary. Over time, consumers will likely see value adds from these services, such as the loyalty benefits we already see from Starbucks. There’s a wide-open door now, as consumers are a bit irritated by delays when using the new chip-enabled credit cards. Mobile pay can be faster in some cases.

4. Your Phone as Your Password

One development that will help mobile pay will be the increased use of mobile devices in two-factor authentication schemes, like the one Amazon just implemented. Users will get a temporary passcode by text or use token-generating software to log in to many financial sites soon. As they get used to whipping out their phones during these transactions, they’ll be more apt to use them to buy things. The phone-as-password development will also hasten the end of old-fashioned passwords. Good riddance.

5. Your Money or Your Data

If you don’t know someone who’s been hit by a ransomware virus, you will soon. Brazen hackers keep finding ways to take control of computers and data and force payment by consumers or organizations to free them. There’s no end in sight for this threat, which means you should keep your security software up to date. However …

6. File-Less Attacks Grow

One of the most alarming developments in the security space has been the growth of cyber attacks that completely bypass computers’ software (and thus, antivirus software). “File-less” attacks involve techniques like injecting malicious code directly into a computer’s memory space. They are much harder to prevent and detect; they are similar to the point-of-sale device memory attacks that have been rampaging through big retailers, stealing millions of credit card account numbers. You should be hearing much more about these soon.

Thanks to increased risk to our personal and payment data, it’s important to monitor your credit for signs of identity theft, You can do so by pulling your credit reports for free each year on AnnualCreditReport.com and viewing your credit scores for free each month on Credit.com.

7. Drones Everywhere

As drones continue to come down in price and become easier to operate, our skies will likely be filled with them. Sure, there’s some great potential for drones, which are now a staple in news coverage of big events. But Heaven help us if they start crashing into each other, taking pictures of us in our homes or becoming a fixture in life-casting videos on the Kardashians.

8. The Campaign

Finally, the one thing I can guarantee during 2016 is that noise will dominate signal on social media during the presidential campaign. The Internet is the best tool ever invented for spreading mistruths. Knowing this, you can be part of the solution by simply not forwarding or posting lists of bad things about Donald Trump’s hair or Hillary Clinton’s bathroom breaks. Heck, Americans showed incredible restraint during the release of Star Wars as millions managed to avoid posting spoilers. Let’s show similar restraint during the election, too.

This story is an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its partners.

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