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Jump forward 30 years to today however, and you'll see that the humble credit card is being pushed far beyond its original design limits.

A significant number of transactions now involve the card being "unsighted", mainly because they're done online or over the phone. Unfortunately for the seller, such transactions are not guaranteed and can (if determined to be fraudulent) indeed "bounce", just like cheques of yester-year.

What's more, customers can find that a villain needs only get ahold of the embossed details from their credit card in order to effectively gain access to their money.

Of course the banks are quick to point out that they will indemnify card-holders against such fraud -- but there's still a $50 penalty involved if you are unfortunate enough to get hit.

With the details of millions of credit cards flashing around the Net and being stored on computers (many of which are far from secure), it's understandable that levels of credit-card fraud appear to be growing at an alarming rate.

Unfortunately, as long as we retain a 30-year-old system, this problem is only going to get worse.

Perhaps it's time for something to replace the humble credit card and its antiquated model.

Given the huge advances in technology since the first cards were developed, surely it's now easily possible to build in such things as biometric authentication or something similar.

We've seen attempts at "smart" credit cards (such as ANZ's ZED card) but they've failed to take off for a number of reasons.

Perhaps the real breakthrough will be when a ubiquitous smart-card format is developed that will become part of every PC's interface package and EFTPOS/card terminal.

Maybe even one of the existing memory-card standards could be used so as to take advantage of the growing number of home PCs set up to read these cards. That way, when you want to buy something over the Net with your new biometric card, you just pop it into the same device you use to download the pictures from your digital camera.

But how are we going to convince people to transition to this newer (more expensive) technology?

Well ZED failed because it really didn't offer users any real benefits over existing (old fashioned) card technology.

If the new "smart" credit cards are going to work then they have to come with some kind of sweetener. Maybe things such as lowering the interest rate on card-borrowing, wiping the need to pay the first $50 of a fraudulent transaction, or adding some new rewards system would do the trick.

Sellers, especially card-not-present sellers, could be enticed to support the standard by offering them greater payment guarantees for online or mail-order sales.

What do you think?

Is it time we retired our "dumb plastic" credit cards in favour of smarter devices that weren't so easily compromised (ie: simply copying the name, expiry date and card number)?

Surely if card companies reduced the ease with which fraud can be perpetrated then we'd all benefit because then they'd be able to lower the interest rates (ha ha!).

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