An Australian small technology company will soon pilot a battery-powered supercard which promises to stop up to $1 billion a year in credit card frauds, the Sydney Morning Herald reported today.

The company is EMUE Technologies.

According to the report written by Asher Moses, the new supercard has been developed over 2-1/2 years.

Trials for the supercard would begin in quarter one 2009 with an Australian bank in conjunction with one bank each in Britain, Israel, Switzerland and Italy.

There would be no major changes in merchants systems, according to the report.

The new technology replaces the static three-digit security code found on the back of a credit card which is given out to the merchant together with card number and expiry date.

There will still be a security code. But instead of having it printed on the card itself, the code will be generated by entering onto card’s keypad a PIN selected by the user when the card was created. The code according to the report is a one-time number generated by the card using the PIN and a unique seed which is also generated when the card is created. Both PIN and the unique seed are stored with the bank.

If the PIN and the unique seed are not embedded onto the card but are stored with the bank, how is the security code generated? And validated?

The supercard automatically connecting to the bank’s system each time the cardholder uses the card?

Wow! This is one super credit card that I don’t mind having one. According to the report the technology could also be used for logging into online banking and for verifying a bank’s identity during phone calls from the bank.

I am sure more coverage will be written about this supercard. It is one technology we will include in our watchlist.

This is where you can find the SMH story: http://www.smh.com.au/articles/2008/11/12/1226318724466.html