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Citi debuts battery-powered credit cards

December 03, 2010

By Barbara Marquand | Money Rates Columnist

The ordinary plastic credit card is going high-tech, with the newest cards equipped with computer chips, buttons and lights.

Whether this is the dawn of a new era for the industry remains to be seen, but one credit card issuer is already debuting a newfangled card and others may follow.

What will Citi Cards credit card do for you?

Citi Cards announced in October its new Citi 2G card, which lets consumers redeem rewards with a touch of a button at the cash register.

The new credit cards -- now in the hands of a limited number of customers in a national pilot launch -- feature two buttons on the front. The customer can press one button to choose regular credit when making a purchase, or push the other button to redeem reward points to pay for the purchase. Pressing one of the buttons activates the card, and a corresponding light turns on to confirm the chosen option. When the card is swiped, the transaction goes through according to the customer's preference.

The new cards, which can be used wherever credit cards are accepted, are the same size and shape of any other credit card.

"What is unique about the Citi 2G credit card is what's inside of it," Terry O'Neil, executive vice president of Citi's North America Credit Card Division, says in a video announcing the card's introduction. "It has a battery and a chip."

Citi is the first issuer to pilot the technology. The company says it's sending the 2G credit cards to a select number of Citi cardholders in the November 2010 pilot program and will gather customer feedback before offering the cards on a larger scale in 2011.

Gee-whiz credit card technology

The new Citi card uses a technology platform developed by Dynamics Inc. headquartered in Pittsburgh, Penn. The technology features a paper-thin, flexible computing device in the credit card, which can program the magnetic stripe on the back according to the consumer's preference. The device can change any bit of information on the stripe at any time, and it lasts more than three years on a single battery charge.

The technology has a variety of applications, including two unveiled by Dynamics in September. One enables a single card to include multiple payment accounts, allowing the cardholder to choose which payment account to use for a purchase. The second application lets users hide their account numbers until time of purchase, a measure designed to increase security and prevent fraud. A card with this application features five buttons on the front, which the consumer uses to enter a personal unlocking code. Once the correct code is entered, the hidden account number is revealed and the card is activated.

The beauty of the technology is it doesn't require an upgrade of some 60 million credit card card readers, a key advantage that may allow it to take off faster than other so-called smart credit card technologies. Older card readers, for instance, don't work for contactless credit card payment technology, in which a phone or credit card is waved in front of transaction reader.

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