4 changes coming to credit cards

Security features are being updated, which means a sleeker, more stylish look to new credit cards.

By MSN Money Partner Sep 7, 2012 12:00PM

This post comes from Matt Brownell at partner site Credit.com.


Credit.com on MSN MoneyThe way we pay with plastic has changed a lot over the years, from the explosion in debit card usage over the last couple decades to the proliferation of rewards cards from retail stores, airlines and hotel chains. The physical features of cards have also evolved.


Here are some of the ways that the look and feel of your card has changed over the last several years, and how it will continue to change in the near future.


No more raised numbers?

Seeing credit cards with embossed characters -- that is, those raised numbers and letters on the front of the card -- brings to mind the old days, when credit card transactions were carried out with "knuckle buster" devices that took a physical imprint of the card. The embossed characters also served a security function by making it harder to duplicate a card.


"At the time, an embossing machine was pretty expensive for crooks to get their hands on," says Raul Vargas of Identity Theft 911.


Both functions now seem somewhat archaic. It's easier for identity thieves to replicate the embossing, and most transactions are carried out by swiping the magnetic strip. As such, both Visa and MasterCard now offer customers flat cards without the 3-D lettering.


One advantage to unembossed cards is that your local bank can make you one on the spot, allowing you to go into a bank and walk out with a new credit card.


"There has been a move to put instant issuance of the card into the branch," explains David Robertson, publisher of consumer payment journal The Nilson Report. "It's there that you're seeing cards issued with less levels of personalization than are available to the bureau mailing the card."


Unembossed cards are far from becoming the standard, in part because many merchants still rely on old-fashioned carbon-copy devices as a backup. Robertson says hundreds of thousands of the devices are still sold every year. But don't be surprised if the next card you get is smooth to the touch. (Post continues below.)

Smart cards

Magnetic strips replaced carbon-copying a long time ago, but even they aren't the most up-to-date way of paying with a credit card. So-called smart cards use embedded chips instead of magnetic strips to make payments. Depending on the technology, the chip may require you to insert the card into a slot or simply wave it at a special terminal.


The terminals can be found everywhere from gas stations to New York City cabs, and issuers offer a variety of contactless cards (like MasterCard's PayPass line). Still, chipped cards are by no means common in the U.S., as adaptation of the chipped cards (and the terminals that accept them) has been relatively slow here when compared with Europe, where smart cards are the standard.


But that's going to change in the next decade.

"(The issuers) have all committed to chipped cards," says Robertson. "It's a multistep process, and the first step will involve the merchants' side, with banks sending out directives to the merchant community."


The first deadline is just a year away, he says, and he estimates there will be widespread use by 2015.


Even then, don't expect to see the magnetic strips disappear. Even those ahead-of-the-curve Americans who currently use smart cards generally have hybrid cards with both chips and magnetic strips, so that they can be used at either kind of terminal. That's likely to continue for the foreseeable future as retailers are slow to adapt.


"There will be some merchants who deploy terminals by the deadline, but it's overwhelmingly likely that most will not meet the deadline," says Robertson. "This is not a situation where someone snaps their finger and it all gets done."


Evolving (and disappearing) security features

Image: Creditcard Computer (© Stockbyte/SuperStock)Embossed numbers are among several physical security features implemented by card makers over the years, all with the goal of making the cards difficult to replicate.

"They updated the signature panel so it's not just a blank sticker," says Vargas. For instance, the background of the panel was layered with the words "Visa" or "MasterCard." A similar approach was taken with the logo itself: On closer inspection the Visa logo was revealed to be made up of tiny V's. And then there were the holograms embedded in the front of the card, which were likewise difficult to copy. But all three have seemingly fallen out of favor.


"They used holograms because they're hard to replicate, but I don't think many issuers use holograms anymore," says Vargas. The same holds true for the special logos designed from tiny letters. Meanwhile, the patterned background of the signature panel appears on fewer cards these days. It seems that as crooks became more sophisticated, it stopped being worth the trouble for banks to load their cards up with fraud-proof design features.


"U.S. banks care about cost versus rewards," says Vargas. "Twenty years ago the hologram stopped fraud, but now that the crooks have the technology to reproduce that, it's no longer worth it."


What security features remain? There is the CVV code, the three-digit numerical string on the back of the card intended for card-not-present transactions. And if you have a smart card -- especially one without a magnetic strip -- it will be difficult for a thief to steal the payment data off it (whether or not you wrap it in tinfoil). The hologram is evolving, too. In 2005, for instance, MasterCard introduced cards that embed holograms directly into the magnetic strip.


Offbeat designs

If doing away with embossed lettering doesn't make your card sleek and stylish, why not take the next step and just do away with numbers and lettering altogether? That's what Discover did with its Discover it card, which removes the name and number from the front of the card, leaving only the logo. The relevant information is instead on the back of the card.


And lest you think that a card with no readily visible name on the front is less secure, note that it comes with a patterned signature field, a hologram-embedded magnetic strip and $0 liability on fraudulent purchases. And the rewards aren't bad, either.


Other issuers have gone in the opposite direction, adorning the card with bells and whistles in an attempt to separate themselves from the pack. Take the Citi 2G, a rewards card that Citibank began testing back in 2010. The card is adorned with two tiny buttons: one for regular credit card transactions, and another which allows you to pay for your purchase with whatever rewards you've managed to accumulate. A tiny light will even indicate which mode you're in.

Finally, some card issuers have experimented with different materials for their cards. The American Express Centurion card, for instance, is made of anodized titanium, while the J.P. Morgan Palladium card is made of palladium and gold.


These and other nonplastic credit cards are generally geared toward an exclusive, high-income crowd, so chances are you won't get to pull one out of your pocket. Still, it's a good example of how issuers are using unique design choices to differentiate their cards from the competition.


More on Credit.com and MSN Money:


Sep 10, 2012 5:14AM
if they want to change anything at all about credit cards, it should be those damned interest rates.
Sep 9, 2012 3:19AM
You can still be credit card debt free by paying off every month with a card that has no yearly fee and then collect the rewards they give you. You just never charge more than you can pay off at end of month. I know some people have no controll lol.
Sep 10, 2012 6:42AM
I changed my credit card future years ago,I cut them all up and put them in the trash..
Sep 8, 2012 5:55PM
Some cards have your photo on them. I feel that All Credit Cards should have your picture on them . it would prevent a lot of unauthorized use.
Sep 8, 2012 2:41AM
Hey Dcsouthgw,

For the vast majority of people, what you just said it totally false.  There is way more free money flying around in the credit card world than the debit card world.  Overall, Debit card rewards are diminishing, credit card rewards are not, in some cases they are increasing.  You don't know what you are talking about.  
And what about the new debit card swipe fees??  Anyone who is smart with money uses credit only, and pays off their balance at the end of the month.  The rewards you receive are allowed by the ridiculous charges and interest the CC industry takes from their more idiotic customers.  Let the idiots pay a piece of your way, and use self control.  It's very simple.
Sep 8, 2012 8:07PM
As someone who works in retail, the raised numbers are useful when there is a power out or the servers crash and we need to break out the old "knuckle dusters" in the back.  It's only for emergencies, but it's good to have it.
Sep 9, 2012 12:14AM
pls leave the embossed characters for the visually impaired
Sep 7, 2012 8:02PM
pay with cash, live debt free. Follow Dave Ramsey.
Sep 10, 2012 7:18AM
If we cant pay cash we just cant pay. None of the junk for sale would be worth the interest and all of those cooked up penaltiies they charge.
Sep 7, 2012 8:09PM

How about if they put your picture on them too. That would make a little nore difficult for thieves to use them...

Sep 9, 2012 1:03PM
 All the talk by this administration about credit cards and they changed nothing for the average middle class other than reading the rules easier. If obama had been seriouse he would have limited  intrest on balances to 10 %
Sep 7, 2012 8:21PM
Yeah, these changes don't make me feel very secure. The banks are willing to put up with the fraud because it costs less that beefing up security.
Sep 10, 2012 10:05AM
The smartest move would be to totally do away with credit cards as they are just another way for the big banks to legally rob you.
Sep 8, 2012 12:01AM

I pay with cash. Screw credit cards, I've been debit free for over ten years and it is wonderful. Cash is the way to go.

Sep 7, 2012 10:15PM
cards with a chip have been the norm for over  decade in europe. The first one I got was a meal voucher card in Zurich when our plane needed a repair and we had a 4 hour layover, and that was a dozen years ago - a chip just for a meal voucher! Yet US banks were too cheap to pay the royalty fees and lumber on years and years out of date (like our cell phone and TV broadcast systems - we think we're on top of the world, but we're really not even close).
Sep 7, 2012 7:10PM
MSN has been **** for years! Already dying!
Sep 8, 2012 8:56PM
"Less levels???!!!" If you don't know when to use "less" and when to use "fewer," you shouldn't be publishing anything without first submitting your text to an editor.
Sep 7, 2012 9:18PM
The SPAM Report Icon is in the LOWER RIGHT CORNER. Just hover over it and it appears. 

BTW my wife is British and has a credit card that requires a PIN NUMBER for the Chip that is Installed in it. That's what I want in the States.  I have to use my Passport when we visit the folk over there and use my credit card.
Have never figured out why credit cards refused to go to a system like the debit cards where you need a pin number. If they did it wouldn't matter if someone stole your credit cards.
Sep 7, 2012 10:53PM
US knows how easy it is to hack the chips. There is still work to make the chips more secure.
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