Credit card fraud is on the rise in the United States. In 2014 alone, nearly 32 million customers had their credit card accounts breached. While the majority of credit card fraud incidents (45 percent) were related to online or card-not-present transactions, in which thieves used stolen card numbers to make online purchases, the second most common type of fraud was related to counterfeit cards. An astounding 37 percent of fraudulent transactions were due to criminals making fake cards using real customer account information, and then using them to make purchases.

 

The recent introduction of EMV, or chip-and-PIN cards, to U.S. consumers is in part designed to prevent credit card counterfeiting. Because individual transaction details, including account information, is encrypted into a one-time use code that is sent to the processor, it’s going to become more difficult for hackers and thieves to access the information that they need to make counterfeit cards. However, while chip-and-PIN cards are only just beginning to gain traction among banks, scientists remain hard at work to develop even more technology that will protect consumers and eliminate credit card fraud.

Biometrics and Credit Cards

Most of us by now are familiar with biometrics — the use of personal, unique characteristics as identifiers to grant access to secured areas or services. The most common type of biometrics is the finger or thumb scanner, which relies on individual fingerprints to authenticate users. Once the domain of Hollywood spy movies and top-secret government agencies, biometrics has now become an accepted part of everyday life for most people; many smartphones, for example, include biometric recognition as a means of protecting the device from unauthorized access.

Biometric technology is slowly making its way to the realm of credit cards. Last year, a Norwegian bank worked with MasterCard to develop a credit card in which a fingerprint scan replaced the PIN in a typical chip and PIN transaction. This same technology is the cornerstone of Apple Pay, which allows customers to pay for items using their iPhones. While response to this technology has been positive overall, it has not yet reached wide acceptance due to the complexity of collecting and storing individual customer fingerprints.

And while biometrics does hold some promise for reducing fraud, it still doesn’t address the issue of counterfeit credit cards, which will continue to be an issue as long as biometric readers are not widespread. However, nanotechnology does hold a great deal of promise when it comes to curbing counterfeiting — from credit cards to designer bags and beyond.

Nanotechnology: Stopping Counterfeiters in Their Tracks

Counterfeit items have been a problem for hundreds of years. And in that time, the criminals have become more sophisticated, to the point where it’s often all but impossible for most people to tell the difference between a real and a fake item. There are usually signs, of course, but often they are so subtle that the victim of a crime doesn’t even realize that there is a problem until it’s too late.

While nanotechnology is probably not going to stop counterfeiters from attempting to make fake items or credit cards, it has the potential to slow them down — and keep them from profiting from their crimes. South Korean researchers have recently developed a technique to create unique, random patterns of tiny nanowires that can be used to “tag” items to verify their authenticity. By “reading” the nanowire tag that’s stored in a unique barcode on the item, the nanowire pattern can be compared against the database of known authentic items or cards. Much like fingerprint technology uses a series of points to measure a print against the database to ensure a match, the nanotechnology works in much the same way.

To create the tags, the scientists coated nanowires with silicon and placed them in a dye solution, which is then dropped on a sheet of thin plastic; each unique pattern is created with 20 to 30 nanowires. The patterns were then analyzed by an algorithm, which assessed the position and color of each wire, and stored it in the database. Each pattern was also issued a unique barcode. When that barcode was scanned, the database checked the pattern stored in the code against known patterns. A match meant an authentic product, a mismatch indicated a fake.

While the technology is being touted as a way to protect commonly counterfeited items, like designer bags and sunglasses, many experts are touting the potential applications for credit cards as well. Because each nanowire tag costs less than $1, and does not require changing the appearance of a credit card, many believe that it’s a more cost effective solution than replacing compromised cards, which currently costs an issuer upwards of $14 or more.

However, there is still research to be conducted on the effectiveness of the nanotechnology on a large scale, and the development of readers for the cards. Still, because counterfeiters are becoming more sophisticated, there’s a need for more advanced protections, and nanotechnology is showing promise to be the type of protection consumers are clamoring for.

Credit Cards photo courtesy of Shutterstock