Some 40 years after the humble magnetic strip changed banking forever, a new high-tech credit card is heralding another revolution in personal finance.
Credit card companies are developing a range of cards that can talk to their owners.
They will also be able to display your balance, while also doubling as a reward card, it is promised.
Breakthrough: Mastercard has created a card that can display your balance and even talk to you, while also doubling as a reward card
The cards, due to be introduced in the U.S. later this year, will have wafer-thin microprocessors and will run on batteries that last up to three years.
As companies try to tackle rising fraud, the card will only display personal information after a security code has been entered.
A few years ago, Europe moved to chip-enabled cards allowing the user to input a pin number to pay for goods. and as a result fraud has dropped dramatically.
However, it took a further decade for the banking industry and the technology specialists to agree on a universal magnetic strip until the credit card as we know it was born.
In France, for example, credit card fraud fell a massive 80 per cent following its introduction.
In the U.S. modifications have been much slower, partly because people are worried about change, but also because switching over the 600million credit cards in circulation across the country is no small task.
But a small group of credit card makers are determined to change the way Americans spend their cash.
Citibank released the new 2G card, which has a programmable magnetic strip and buttons on the front for users to choose to use it as a credit card or to spend reward points.
A trial is currently ongoing and, if successful, it could roll out across the country.
Over at Mastercard, the company has just released a card that has a small LCD screen which displays a one-time code which the customer can use to make an online purchase.
It means even if someoneâ€™s credit card details are stolen, they will be useless to buy anything with without the one-off code.
There are even talks that credit cards could be done away with completely and replaced with a small chip inside cell phones for paying for goods and services.
Banks, phone providers, Google and Apple, are reportedly working on mobile payment systems that rely on short-range wireless technology that allows devices to transmit encrypted data.
Future: Citi has created a credit card which also works as a reward card. The user presses the ‘regular credit’ or ‘request rewards’ button before paying
But that kind of technology is at least five years away, so the credit card companies are hoping to continue playing a part in the lives of the 1.7billion people worldwide who have credit cards.
Todd Ablowitz, president of Denver-based Double Diamond Group, a consulting firm that focuses on payments strategy technologies and products told creditcards.com: â€˜Although mobile payments is the future, you’re not going to move all that overnight to magical phones.
â€˜So these are step innovations, rather than leap innovations. Some are very much needed, and some are probably not going to make it.â€™
Magnetic strips contact just 70 bytes of memory. By comparison, a CD can hold 800MB, or enough information for storing 12million credit cards.
The new cards are created by Dynamics Inc., which is working on several other high-tech cards.
CEO Jeff Mullen explained that the end of the magnetic strip has been mooted for years, but is still the dominant payment system in the world.
He said: ‘Magnetic stripe readers are being placed in more places than ever before — like vending machines, movie theater kiosks and taxicabs.
‘Even in Japan, where the infrastructure is in place and phones [which can make payments] have been distributed for seven years, the volume of phone payments is still significantly less than one per cent share of transactions.
‘European chip cards comprise only about 10 percent of cards in world.’