April 2004

Safer Credit

By Technology Review

On a trip to Europe, Ed Kelley found that his calling card had stopped working; thieves had stolen the number and run up huge charges. Frustrated with the lack of security on calling cards and credit cards, Kelley, a group leader for IBM Global Services, sat down with IBM engineer Franco Motika to create a solution. The pair designed a card with a novel feature: a tiny keypad. When the owner first receives the card, he or she must choose and input a PIN that is "burned" into the card's circuitry-making it much more secure than a PIN stored in computer memory. To use the card, the holder enters the PIN on the card itself; this causes a "smart card" chip to generate a unique transaction number good for only one time. This number would be sent to the credit card company, where a computer would compare it to the output of an algorithm specific to that card. Only if the two matched would the transaction be approved. "With this card, somebody could have your credit card number, and it would do them absolutely no good whatsoever," Kelley says.