Sunday, February 1, 2015

Getting ready for new card technologies

A host of new technologies are being proposed and evaluated for cards. This article is the first of a two-part series that addresses the disruptive events looming large on the transaction card horizon. Part one addresses the disruptive events with their possible effects on today’s manufacturing processes and on the card’s role in future digital transactions. In the next issue of Card Manufacturing, part two will deal with issues of card quality and text procedures in light of these new technologies.

 Part 1

Taking a census of the cards in my wallet gives me a small sample of some of today’s card technology as well as some insight into new cards being considered going forward.  They consist of:

• 2 embossed, magnetic stripe financial cards

 • 1 embossed, magnetic stripe, contactless financial card

• 1 embossed magnetic stripe, chip, contactless financial card

• 1 DOD printed, magnetic stripe financial card

• 1 D2T2 printed, magnetic stripe ATM card with photo

• 1 litho printed, barcode prepaid card (closed loop)

• 1 thermal printed, magnetic stripe membership card

Manufacturing these cards profitably has caused companies to focus on minimizing scrap and WIP (work-in-process) inventory while eliminating any manufacturing errors. The manufacturing equipment and processes have been upgraded to guarantee quality cards without manual inspection while at the same time optimizing manufacturing plant capacity and throughput. This has been done by the continuous improvement of a manufacturing process that was developed some 30 plus years ago.

 But even in this small sample of cards can be seen some new technology that will require changes to the “standard card manufacturing process.” While some of these cards have new card technology, it has not yet been required for a financial transaction, except in some very narrow applications in some countries. ICMA’s involvement in card standards brings us in contact with the international community where we see new initiatives that could require future disruptive changes to the “standard process. “ These changes fall into three categories: card materials, electronic technology in/on cards, and the impact of the internet on cards and transactions.

 The growth in the use of metal in cards has been dramatic. This includes full metal cards using several different materials and metal/plastic composite cards, including layers of metal foils. Also, polycarbonate cards have been gaining ground especially in driver license/ID applications. Recently, polycarbonate cards that can be laser engraved to produce color images have been introduced, increasing laser engraving options that could previously produce only black and white images.

 The second category of disruptive change is being driven by the major initiatives being considered to include devices on cards. Biometric fingerprint sensors, displays, keypads, full-face touch screens, microphones, buttons and batteries are all being considered. Biometrics as a separate technology is being worked on in three ISO/IEC Standards committees and in three ISO/IEC SC 17 working groups as well. This is a major investment in energy that will produce results for future card applications.

 The third category of disruptive change comes from the impact the internet will have on cards and in all manner of transactions. The effort seems to be at least somewhat driven by “what is possible” rather than on “what is needed.” Mobile wallets are the subject of many news articles and the competition to develop the “best” electronic wallet is astonishing. Initial implementations have been superseded with newer solutions as limited trials try to clarify the optimal mix of value and security. One of the newer features announced for some of the electronic wallets is that financial transactions can be enabled using a mobile device without the need for a secure element in the device.  Called Host Card Emulation (HCE), it allows could-enabled financial transactions without involving the telecom provider or secure key data from the bank issuer resident on the mobile device. This could have a profound effect on the present mobile device market.

 In the next issues of Card Manufacturing, I will reflect on these disruptive events and their effect on card manufacturing processes, quality and testing. These effects could be major, not iterative. To understand what’s coming allows for preparation in implementing operational changes that, in turn, provide competitive advantage.