Metal Cards Carve Out Place as Consumer Defense Against Fraudsters

There’s still a place for the card — the tangible, physical card — in consumers’ wallets. In fact, Adam Lowe, Ph.D., chief product and innovation officer at CompoSecure/Arculus, told PYMNTS that metal cards hold allure for premium customers and can be a first line of defense against fraudsters.

“In the same way that the keys to the deadbolt on your house are in your pocket,” he said, “the keys to your digital life should also be in your pocket.”

The company has helped bring metal cards to the market, where, as he said, “we took something that was commoditized and made it into a premium experience.” Consumers have a positive impression of banks issuing metal cards. “A metal card that’s also an authenticator can help you feel secure,” while transacting, Lowe added. The company has, through its digital security platform Arculus, engineered its metal payment cards so that users can just tap them to their phones to be instantly authenticated. This new authentication method is frictionless for users, he said, sidesteps other authentication methods that may rely on some complicated widget or multiple apps on your phone.

Banks Embrace Metal Cards

The conversation came as joint research between PYMNTS Intelligence and Arculus by CompoSecure found that 77% of financial institutions (FIs) are considering tap to authenticate metal payment cards. This enthusiasm comes from “the metal form factor, and the security form factor — in a physical object — appeals both technically and psychologically.” The metal card, he said, is not synced to the cloud (and thus, your personal account information cannot be accessed and stolen by fraudsters).

With a nod to his earlier key point, he told PYMNTS that “when your keys are in your pocket, they are accessible only to you.” Forward-thinking banks, he said, are embracing metal cards because they see the vulnerabilities inherent in knowledge-based authentication (such as your mom’s maiden name) and SMS, too. Even biometrics can come up short, with the prevalence of artificial intelligence (AI) as a tool fraudsters can use to fool voice recognition and other protocols.

Lowe pointed to the metal cards’ security factor: “It’s not probabilistic; it’s deterministic. This means that only you can access what you need.” For banks, the benefits lie in the reduction in call center “time” spent handling customer inquiries. A significant amount of time is spent convincing call center agents that customers are who they say they are. Tapping the authentication-enabled metal payment card to the phone instantly offers up that proof.

“That innovation, alone, can pay for a card issuing program,” said Lowe. In addition, banks that require stepped-up authentication for high dollar value transactions can leverage the metal payment cards to satisfy those requirements — and reduce false declines.

“That’s recovered revenue, and recovered earnings for the bank,” he said, “while preventing account takeovers.” Lowe added that his firm has adopted the FIDO standard (the open authentication protocols also championed by Google and Microsoft, among others).

He described the mechanics of the authentication to PYMNTS: “When you tap that card, your card takes a key and signs that message, then hands that message back to the bank. The bank reads that message, checks the digital signature and verifies that you are you. The digital key essentially unlocks your account, signs with a digital pen, and you prove [that] you’re you.” The hardware component — the card itself — is secure, too (even if it’s left behind in, say, a restaurant) because it’s protected by a PIN. “Even if someone finds your card,” he noted, “they cannot impersonate you.”

The card-as-security platform is poised for growth, said Lowe, adding that metal cards will have a significant “impact on keeping users safe — and banks’ reputations safe, too.”