New Card Technology Prevents Use of Stolen Credit Card Data

“With hundreds of breaches of credit card data resulting in the compromise of more than 100 million customer accounts in the US-alone over the past 15 months, there is greater need now than ever for a solution that protects card holders’ data,” said V. David Watkins, QSecure CEO & President. “QSecure has been working diligently since 2003 to develop solutions that mitigate the impact of security breaches for payment card issuers, acquirers and retailers.”

QSecure has invented SmartStripe technology which incorporates dynamic cryptography on the payment card’s magnetic stripe, solving the security risk stemming from the static nature of data on the magnetic stripe. Each time a consumer uses a SmartStripe card, a proprietary magnetic media chip embedded in the magnetic stripe programs a unique cryptographic number on the stripe that is valid for only one transaction. If the payment card’s data is compromised, and criminals attempt to re-use the data from the stripe, card issuers will be able to stop the transaction in real time.

“Consumers are understandably concerned that their card data can be compromised any time they hand a card to a waiter at a restaurant or if their data is stored by a retailer whose database or network gets hacked, like TJ Maxx” said Watkins. “Credit cards embedded with our SmartStripe technology eliminate that problem, as any compromised card data would be useless for additional fraudulent transactions.”

Unlike other solutions which require changes to the existing credit card infrastructure, QSecure’s technology works seamlessly within the existing retail system, requiring no modifications to merchants’ card readers. Further, its usage is transparent to the card holder, so no changes to buying behavior are necessary. Future versions of QSecure solutions will incorporate a small, flexible display to secure online and other card-not-present transactions.

“Making each magnetic stripe transaction unique would be a great advancement for the payment industry,” said Pascal Burg of Edgar Dunn & Company. “Edgar Dunn & Company works closely with card issuers and most issuers are constantly looking for new ways to prevent fraud.”

Founded in 2003 by Kerry Brown, an expert in the field of payment transactions and magnetic media who previously co-founded ViVOtech, the company has been working to perfect its patented SmartStripe technology.

QSecure has raised $17 million in Series A and Series B funding from venture and strategic investors including Allegis Capital, Worldview Technology Partners, UMC Capital and Société Générale. The company is working on programs with major card issuers expected to start by 2008.