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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