MasterCard has been working on their next-generation payment card — dubbed the “Display Card” — with interactive and more secure features. After testing it in Europe and Asia, the card payment processing company looks to introduce the new payment card in the U.S.

In June 2010, MasterCard (NYSE:MA) partnered with Swiss-based NagraID Security, a Kudelski Group (SIX:KUD.S) company, to launch the “Display Card” in Europe. Since then, MasterCard collaborated with NagraID Security and Symantec Corp. (NASDAQ:SYMC) to announce that the “Display Card” will make its debut in the U.S. in 2011.

The MasterCard “Display Card”

The Display Card looks and functions almost exactly like the regular debit and credit card however, there is a small LCD display on the upper right-hand corner and a touch-sensitive button. Cardholders can generate dynamic one-time “passwords” as an authentication measure.

These one-time passwords are activated by the card issuer as dynamic card verification codes (CVC2), which are normally found on the back of the card. Or, they can serve to activate the MasterCard SecureCode feature, which requires the cardholder to enter the password when shopping at an online merchant.

According to Cyril Lalo, CEO of NagraID Security, adoption of the “Display Card” by Asian and European bank and their customers was highly successful. The next-generation payment card will appear in the 2011 RSA Conference, an event featuring the latest knowledge and advancements in Internet security.

It remains unknown as to which banks will be the first to issue the “Display Card” and when they will appear in the wallets of consumers.

Technological Advancements of Interactive Payment Cards

There is a race among card processing companies to release interactive payment cards that are more secure and and versatile. Visa, a major competitor of MasterCard, has the Emue Card that functions very much like the Display Card and it also remains unclear when Visa will partner with card issuers to make the Emue Card available to U.S. consumers.

The hottest buzz in the interactive payment card industry surrounds Dynamics, Inc., which engineered the Card 2.0 technology – receiving the “ Best of Innovations for Personal Electronics” award at the 2011 Consumer Electronics Show. The “Hidden” credit card functions very much like MasterCard’s Display Card and Visa’s Emue Card but with even more security.

The “Hidden” card actually replaces a portion of the credit card number with a display. After entering a passcode, the magnetic strip turns on and the remainder of the credit card number will appear. This feature ensures that the card cannot be used, in-person or online, to make fraudulent purchases in the event that the card is stolen. The Display Card and Emue Card displays the full number but hides the CVC2, which only protects against fraudulent online purchases.

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Simon Zhen

Simon is a research analyst for MyBankTracker. He is an expert on consumer banking products, bank innovations and financial technology.
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