Your credit card may soon have an on-off switch

Technology will soon allow you to control who uses your card, and when -- helping you fight fraud.

By Credit.com Aug 12, 2014 1:04PM

This post comes from Christine DiGangi at partner site Credit.com.


Credit.com on MSN MoneyEmerging technology gives consumers the ability to turn their credit and debit cards on and off through a smartphone app, a capability that can not only help families and businesses control how authorized users shop with the card but also, and perhaps more importantly, help prevent card fraud.


On/off switch © imageBROKER/AlamyOne of the companies developing this tool is Ondot Systems, which works with payment processors to make the technology available to banks and their customers. The on-off function, in addition to other control preferences, is available to cardholders through their bank or credit union's mobile app. Some financial services companies are working to develop their own technologies as well.


A remote control for your credit card

"The basic idea is very simple," said Rachna Ahlawat, founder and executive vice president of products at Ondot Systems. "Almost everybody has a credit or debit card in their wallet, and most everybody has a smartphone, so what we essentially created is a remote control for the cards they already have in their wallet."


With CardControl, the primary accountholder has a suite of preferences at his or her fingertips, Ahlawat explained. There's the simple on-off switch, which prevents any transaction when a card is turned off, whether it's in a bricks-and-mortar store or a card-not-present transaction, such as a phone or Internet order. If someone attempts to use the card when it's off, the cardholder receives an alert -- if he was trying to use it but forgot to turn the card on, the cardholder can just flip the switch on his smartphone. Otherwise, the cardholder has just been alerted to attempted unauthorized use of his card.


CardControl goes even further (if you want it to): You can set location preferences, so the card doesn't work outside certain areas, as well as merchant categories. This feature comes in handy for cardholders with authorized users on their accounts, Ahlawat said.


"My daughter, her card is open for use at gas stations around the San Francisco Bay area and for department stores," she said. Her daughter is an authorized user on her card, and her daughter can also set preferences of her own (within the parameters set by the primary account holder). Because you can also set spending limits, parents can prevent their kids from abusing authorized user privileges.


These features can benefit company accounts, as well. Not only does this help the card administrator better control use of company cards, it can reduce company risk exposure, since business cards don't have the same fraud liability protections as consumer credit cards.


Prevent fraud With current technology

Ondot Systems works with payment processors -- they're essentially the middlemen between merchants and banks, and consumers don't interact with them -- and these authorization entities work with banks to incorporate the technology into their consumer offerings. CardControl is currently available through about 10,000 U.S. financial institutions, Ahlawat said.


Even if your bank or credit union doesn't offer such technology, it likely gives you the option to set up transactional monitoring, which can help you spot unauthorized activity. You can set up alerts for transactions greater than a certain dollar amount, and because mobile applications are widely available for financial institutions, you can easily check your card activity daily. 


Consumers should prioritize such account monitoring because credit and debit card fraud can seriously damage your finances, even if it's just for a short time. Debit card fraud can be particularly troubling, because you may need the money stolen from your account for bills, and no matter how quickly you spot the issue, the missing money could cause you to miss a payment or overdraft your account.


The credit damage you sustain from fraud could put you in a serious bind if you're applying for financing, setting up utilities, looking for a job lor apartment hunting. Depending on the extent of the fraud, it can take months to get back to normal, so take the time to review your card activity regularly, request your free annual credit reports and check your credit scores for signs of anything suspicious. You can see two of your credit scores every month for free on Credit.com


More from Credit.com


VIDEO ON MSN MONEY

10Comments
Aug 12, 2014 1:40PM
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Fight fraud? What? Stores are forbidden to ask for ID or what?

When a store does ID me when using a credit card,they go on my 'be sure to shop there a lot' list.

However,America's economy thrives on fraud.

Fraudulent ads for nearly everything marketed.

I remember seeing the skecher commercials before they were sued.

Yeah,okay. Just wearing a shoe will tone your legs. I'll buy that claim.

When I get 'free' offers,the first thing I ALWAYS ask is...

"Okay. How much is this free thing really going to cost me?"

Aug 12, 2014 3:58PM
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Great until one uses AutoPay features for recurring billing like Nexflix, WOW, utilities, etc. That 1st month will become such a headache that the user will never turn the card "off" again.
Aug 12, 2014 2:35PM
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I like this... this would help in situations when I may have misplaced my card and not sure if it was stolen or not - Much better than just having the card cancelled. --- I'd like this feature on cellphones too where I could block usage of phone should it turn up missing.. Instead of the I-phone kill which makes the phone a brick.
Aug 12, 2014 6:00PM
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Better yet an Israeli company I read about 5 years ago has developed a credit card that remains null and void until you place your finger on a sensor on the back. It reads your finger print and if it checks out in the micro-chip it enables your card.  Once the transaction is completed your card goes back into a dormant, unusable state.  The technology is available, it's just up to the banks to take the initiative and implement it, and that costs a few extra dollars which would save billions in lost revenue.
Aug 12, 2014 3:59PM
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Best on off switch there is,  is a pair of scissors. 
Aug 12, 2014 2:18PM
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My bank already offers that feature on my debit card.
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