Registers – Coded record sensors – Particular sensor structure
Reexamination Certificate
2001-11-02
2004-11-02
Lee, Diane I. (Department: 2876)
Registers
Coded record sensors
Particular sensor structure
C235S492000
Reexamination Certificate
active
06811082
ABSTRACT:
TECHNICAL FIELD
The present invention is in the field of electronic devices and equipment used in the processing and/or facilitation of financial and security smart card transactions (such as credit cards, debit cards, access cards etc.) using the existing magnetic card storage medium processing infrastructure.
BACKGROUND
Credit cards have been in use in the US and around the world for decades. Unauthorized or fraudulent use of credit card purchases for goods and services has been with the credit card and financial card industry ever since its inception. At least in the US, the culprit has generally been attributed to the use of multiple-track magnetic stripe or magstripe (typically three tracks) for storing all the pertinent personal and credit card account information (in tracks
1
and
2
) of the cardholder. The information contained in the magnetic stripe (typically Track
2
for credit cards) is not visible or readable directly from the card except with the use of a special decoding equipment such as a magnetic stripe reader or magnetic credit card reader commonly used in today's brick-and-mortar retail world for credit purchases of goods and services. It is a well-known fact that the cardholders' vital information stored in tracks
1
or
2
of the magnetic stripe on the back of credit cards can be easily “skimmed” or stolen. Consequently anyone can in principle create illegally any number of these credit cards for fraudulent use and identity theft purposes. This indeed is the crux of credit card fraud and cardholder identity theft problems in the US today.
The advent of the so-called smart cards (smart credit or finance cards) first came about in Europe about three decades ago offered a lot of hope, then and now, for solving the credit card fraud and identity theft problems. Plastic cards are used as the carrier of microchips which can store much more information and much more securely than the magstripes counterparts. Indeed, with the development of modern cryptography technology in recent years, which enabled smart cards to have a high degree of security, the popularity of smart cards and their acceptance as financial and banking instruments by the consumers, at least in Europe, started to grow and flourish during the past decade.
Despite a great deal of efforts in advertisement dollars and the investment of literally hundreds of millions of dollars in system infrastructure made by numerous banking associations during the past five years or more, most notably American Express in the rollout of their so-called “Blue Card” about two years ago, smart cards are simply not making any significant headway into the US marketplace. In other words, only a very small fraction of the US credit card holders today are using smart cards for credit purchases in the brick-and mortar retail world. For the very small percentage of smart card usage, most of them are used on the Internet.
Contrary to the situation in Europe today, where smart cards are the main stay for credit purchases for goods and banking services by the general populace, the behavior of most Americans towards smart card usage and acceptance in the US is generally considered as illogical, ridiculous (according to the Europeans) and difficult to explain. However, one can probably better understand the current smart card situation in the US by simply noting the fact that it took literally 20-25 years before the general public in the US accepts the use of the ATM (Automatic Teller Machine) cards for money withdrawal from the banks. The Bank of America first introduced such cards to the consumers in the early 1970's and it is not until recently (starting a few years ago) that the American public embraces this wonderful convenience.
Thus one can argue that it is the ultra-conservatism of the American public towards the acceptance of new ideas and concepts about money that best explains why smart cards fail to be widely accepted in the US today. In addition to this seemingly simple but truistic reason, there are other economical factors that might also contribute to their behavior. First of all, one must not forget about the fact that there are at present over 20 millions magnetic card readers in use in the US today. That represents almost $10 B worth of hardware that have to be thrown away if one were to replace them with new smart card readers. That is indeed a lot of money to be written off by the merchants from the economical standpoint and something not likely to happen unless there is an overwhelming reason for them to do so. As far as the merchants are concerned, it is not just the magnetic card readers that they have to replace which to them is hard-earned money. They also have to retrain their employees to use the new smart card readers which represents additional business expenses that they have to bear. That is the reason why the merchants themselves are not enthusiastic in switching from the magnetic cards to the smart cards. When it comes to the question of who are influencing who between the consumers and the merchants, it is the latter that have the upper hand. It is more likely for the consumers to change over to use the smart cards if they find out that their magnetic cards are no longer universally accepted by the merchants.
Finally since the American economy is the number one economy in the world, whatever the Americans accept or not accept in financial or business undertakings usually has a tremendous impact on the actions and reactions for the rest of the world. Thus the fact that Americans today do not embrace the use of smart cards in the US, it has an important but regressive or unfavorable impact on the rest of the global citizens and businesses. Case in point, when Americans travel overseas, either for business or for pleasure, they only carry magnetic credit cards. That pretty much forces the merchants of other parts of the world to also equip themselves with magnetic card readers in addition to smart card readers. Otherwise they might stand to lose the business of those American travelers that happen to visit their territories. As for the Europeans, when they travel to the US either on business or for pleasure, they have to take with them magnetic credit cards otherwise they would not be able to purchase on credit goods or services in the US. Thus there exists an urgent need for a novel device and methodology that can serve as a “bridge” in order to link the magnetic cards world to that of the smart cards. In other words, the American consumers must best be provided with smart cards that would be compatible and useable with the magnetic card processing infrastructure in the US. The same holds true for world citizens other than Americans. They must also be provided with smart cards that can be recognized for use by the magnetic card readers in the US. Of course by being able to successfully link the two credit card worlds, the magnetic card and the smart card can coexist until such time that the smart card would ultimately be the one to use by choice of technology, common sense and uniformity.
Over the past two decades, literally dozens of devices and methodologies have been advanced and patented. They all share the common goal of trying to drastically reduce or totally eliminate all credit card frauds and identity thefts in those parts of the world today, including the US, where magnetic credit and debit cards, and not smart cards, are still widely in use for financial and credit transactions. As alluded to briefly above, since the rampant credit card frauds and identity thefts are still very much with us in the US today, it is evident that none of the ideas advanced and patented to date, implemented or otherwise, have been working effectively at all to alleviate this situation. In particular, no one has ever advanced, until the present invention, the idea of taking advantage of the secured aspects of the smart card and somehow teaming or working in tandem with it to arrive at a viable approach to solving the credit card frauds and identity thefts problem.
Instead, almost all of t
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