At Marqeta, we talk a lot about modern card issuing and how it’s transforming payments everywhere - from short-term finance to expenses management and much more.
But sometimes it’s good to stop for a moment and consider where payment cards have come from - and more to the point just how far they’ve come.
This is exactly what the brilliant Hannah Fry does in the BBC’s The Secret Genius of Modern Life episode about the Bank Card.
With her insightful yet playful presenting style, Fry turned what many might see as a rather dry, technical subject into an hour of fascinating television with the power to appeal to both payment nerds and ordinary folk alike.
Because in reality the story of payment cards is fascinating, entailing as it does international intrigue and espionage, eccentric inventors, madcap schemes to encourage adoption and even adult entertainment.
The four components of physical bank cards
The show, which is available to view on the BBC’s iPlayer, makes the case for the genius of bank cards by walking viewers through their four essential components, starting with the dark magnetic stripe on the back of the card.
Much to Fry’s delight the magnetic stripe, it turns out, is made of exactly the same kind of tape used in audio cassettes. For millennial readers, an audio cassette is…
Unfortunately, it also turns out that just like audio cassettes it’s incredibly easy to copy or ‘skim’ the information contained in a bank card’s magnetic stripe.
Step forward reformed skimmer Tony, who revealed how he ran a network of ‘grabber’ devices in shops during the 1990s to clone customer cards.
Thankfully, after a stint in jail, Tony has joined the good guys and now advises companies on how to avoid falling victim to scams.
This form of cloning crime was dealt a fatal blow with the invention of Fry’s second component of the bank card - chip and pin technology.
The genius of chip and pin
The genius of the chip - effectively a mini computer stuck to a bank card - is that it sends different information to the merchant and network with each transaction, making it pretty much impossible to copy.
The technology was the brainchild of the late French inventor Roland Moreno, who had originally attempted to make a wearable payment device in 1974. The prototype, much to her chagrin, was one of his wife’s signet rings.
Moreno proved that the concept worked yet French banks were uninterested. That was until the 1980s when he convinced a telecom company to embed chips into preloaded cards that could be spent at public phone kiosks.
The technology quickly took off and banks wanted a piece of the action.
Yet it was a full 10 years after wide-scale adoption in France that chip and pin would become the norm in the UK, according to the documentary.
How spy technology transformed card payments
The next and third component of the bank card was inspired by a Soviet listening device, known as the Thing or Great Seal Bug, planted in a US embassy.
To avoid detection by sweeping equipment, Russian intelligence services discovered that it was possible to power a ‘bug’ externally by sending a radio signal to an antenna.
The technology, while causing great controversy at the time, is now in widespread use enabling contactless payments all over the world.
Essentially, bank cards are impregnated with an 85cm (yes 85cm) wire antenna that picks up a radio signal from card readers strong enough to power the chip and execute a transaction.
To demonstrate how the antenna works Fry dropped her producer’s bank card in a glass of acetone, reducing it to an indiscernible blob in the space of half an hour (don’t try this at home). Using a pair of tweezers, she carefully extracted the wire and attached microchip from the sinister-looking solution - before proceeding to buy a coffee by holding the chip and wire on a card reader. Like we said, fascinating stuff.
Security fit for the age of online marketplaces
The fourth component will be familiar to anyone who has ever made a payment online or over the phone (all of us) - the CVV, or the card verification value - or as every shop assistant says, the three-digit security number on the back of the card.
Devised by Michael Stone of global credit agency Equifax, the CVV came about in an effort to protect the rapidly growing number of consumers shopping online.
It was kind of the final piece of a security jigsaw that had been evolving for some years. Prior to the CVV, innovators had developed algorithms to help banks detect unusual spending patterns to tackle remote payment fraud.
Fry revealed that a particularly thorny problem for banks had been incredibly high rates of chargebacks linked to cards used to make remote payments for adult services.
Amusingly, there was some uncertainty on the show as to whether this was down to actual criminals, or just embarrassed men trying to plead innocence after being rumbled watching things they shouldn't be watching. Hmmm.
Fry wrapped up the show with a look at how Visa is using AI to stay one step ahead of modern fraudsters, who deploy sophisticated online attacks that randomly generate thousands of card numbers to find and use active cards.
She also looked at how cards could eventually be replaced by biometric technology, but questioned whether consumers would be comfortable sharing facial recognition information with financial institutions.
All in all, Hannah Fry’s Secret Genius of Modern Life look at the bank card is an hour of anyone’s time well spent.
And, if we could recommend a fifth component to Fry’s secret genius of bank cards, it would be that of modern issuer processor technology. Marqeta’s platform has built on the advances of components one to four to enable card programme pioneers to harness the power of data insights to truly understand their customers.
The outcome is increasingly personalised products capable of being deployed in the native digital experiences of both businesses and consumers everywhere, demonstrating that the genius of cards knows no bounds.
If this blog and the BBC show have piqued your interest in the world of payment cards, be sure to check out Marqeta’s ‘Demystifying Cards’ guide.
