Since their inception, credit cards have relied on the unique identified number to process payments. Over time - as fraud increased and with the advent of online shopping - more security measures have been introduced like the CSC and use of the expiry date. But, with tokenization and the introduction of newer payment technology, could we remove card numbers all together?
Scott: Virtual credit cards are gaining in popularity, but with them comes additional fraud concerns and of course ease of use is always a priority. John Dunne, Vice President of Products with IR joins us today. John, as the virtual card environment evolves, is there a better way that addresses some of these concerns?
John: You know, I think there has to be and I don't think we're too far away from it. I remember when I first got a credit card, you had those raised numbers in the card because this little machine went click clack and took a carbon copy over the top. I haven't seen one of those machines in a long time. I know they're under the seats in taxis as a backup. But they're an old dying technology that's not necessary today. And a lot of the modern cards you get the numbers are printed on them but they're not raised. You're not able to use those carbon print machines. And so I ask myself the question, well, if one of the number one ways fraud occurs is people taking your credit card details, the expiry date, and the CSC on the back and transcribing that down into, you know, into a website or some paper form somewhere, then why don't we have a card with no numbers? Why does it have to be visible? Why do I even need to know what my credit card number is?
Scott: What would be the identifying factor for each consumer? In each account?
John: So I can imagine a world where I can log in to my bank and I could see my cards in there and I would give them a name that means something to me. And the bank would have a number that means something to them. And then maybe I go to a website and it asks me to pay and there's an integration play here. It's where it says, okay, I need your credit card details and just like today I might have my credit card details stored on my mobile phone, right? I would like some kind of integration between my banking institution and my browser so I can say, okay, pop up my list of cards with a meaningful name to me and I'll select one and enter that into the website and there's a transaction that can take place. And when that transaction takes place, the information that the bank identify with that card is potentially transferred to that organization or a tokenized version of it. But I don't need to know it. The party that I'm doing a transaction with only needs to know numbers good for that transaction, and my institution can provide those in a seamless fashion thanks to the beauty of online technology.
Scott: So instead of choosing like we have right now where you say I want to use card that ends in 3455 and I have to remember well which card is that and you go through all that nonsense, you would assign a name to it so Mega Bank gold card and you would just be able so it would make it easier so you wouldn't have to remember all that other nonsense.
John: Exactly. And you know, I have to admit I travel with three or four cards in my wallet and I would have them allocated, you know, this is the one I would label overseas only. It's the one I get zero foreign transaction fees on and it's the one I want to use when I'm in Europe or Asia. I would have another one that I would call my everyday card. I would have another one that is my in case of emergencies. And, you know, maybe you've got a backup as well. So just those meaningful text labels that are going to mean something to me but nobody out there could ever write them down in a form and perform a transaction with them.
Scott: What are the challenges or hindrances to implementation today?
John: So, I honestly think this is within our grasp. And the reason I believe that is if I look at the ecosystem that has been created with Apple Pay, where I look at a card in my phone, I don't know the number of that card. I just visually identify a picture of it and I use that for the transaction and there's a token that gets sent. And I'm thinking there must be a very similar concept that can be transpired because if I'm using a physical card in a transaction today, a million times out of a million that is going to be an electronic transaction. There's nothing necessary for a carbon click clack anymore. But the only time I ever need to know my numbers is when I'm dealing online or dealing with a paper form that I'm filling out to send to my kid's school. Now paper forms are going away. Everyone can integrate with someone like a PayPal to do money transfers between parties. They just need to match up that financial transaction to the business transaction that's taking place. And why do I need if I'm going online and doing this, why can't I introduce a third party to that? Why can't I say, okay, you want to take money from me. That is going to go via my banking institution and bring them into the transaction the same way I do when I tap & go to pay for a taxi with my Apple Pay.
Scott: That's all the time we have for today. Join us next time when we talk about the inevitable demise of the plastic credit card. For more podcasts, check out IR.com.