July 29, 2014

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Are Single-Use Credit Cards Here to Stay?

We’ve written before about shopping safely online and the need for “smarter” credit cards. Now there is a new topic when it comes to credit cards––one-time use or “masked” cards. I think of it as a Mission Impossible type card––“this card will self-destruct in five seconds…”

Ok, well maybe it’s not that dramatic, but I was intrigued by this idea as I have had my credit card stolen in the past. It was scary to think that someone was out there charging up a storm on my account. Fortunately it was resolved with no expense to me, but I definitely hated the feeling that my finances were out of my control, even temporarily.

Credit card fraud costs both time and money for both the card issuers and the cardholders. A 2013 Federal Reserve study calculated that credit and debit cards suffered $8.27 of fraud per $10,000 spent in 2012.

Think about it. When you buy something with a credit card online, you must provide your name, number and address. Both the bank processing the transaction and the merchant has access to this personally identifiable information. Now, in a perfect world, I’d like to trust everyone employed by these companies, but it seems that using a credit card to shop opens you up to potential theft.

“The Mask”

Masked credit cards leave no trace of your real credit card on all those databases where you shop. With all the cybercrime involving stolen credit cards and, of course, last year’s headline grabbing data breach at Target, I decided to do a little more research and see if one-time use cards are the way to go.

Here’s the run down on these cards.

Abine. This Boston-based privacy firm makes masked credit cards, which create one-time account numbers for transactions. It can be used online and in stores as it can also operate right from your smartphone. Abine inputs its own mailing address as the billing address for all masked cards.

For customers who worry that Abine could be hacked by cybercriminals, the company says that they don’t store consumers’ real credit card information. Instead, the data is encrypted and stored by their banking partner.

Bank of America, Citibank and Discover allow customers to create unique credit card numbers for each merchant. You simply login to your account and a temporary account number, with expiration date and security code, is issued immediately that allows you to complete your purchase while protecting your privacy.

Single-use credit cards are a great idea when you shop with an e-commerce site for the first time or with a retailer who has had a significant data breach in the past. Of course, adopting this new technology might not be for everyone. With these cards you won’t be able to accumulate the frequent flyer miles or rewards points that you can with other cards.

But, if your credit card account is compromised by a hacker you will have to spend lots of time tracking down the fraudulent charges, which means accessing your credit reports regularly. If you are hacked, you’ll need to spend time calling your credit card company, the three major credit bureaus, the merchant…Sounds time consuming––and I speak from experience––it is.

I think that masked credit cards are here to stay and there is a very good chance I’ll be using one soon.

Protect Yourself From Identity Theft

It’s important that you take identity theft seriously and maintain the proper precautions to protect yourself and your family. So don’t forget to check your credit card statements regularly for suspicious activity, and think about adding another layer of protection by enrolling in IdentityForce’s UltraSecure+Credit. Your personal information, including your credit, will be monitored 24/7, and you’ll be notified immediately of any suspicious activity so you can act before any damage is done. If anything does happen, IdentityForce will be with you every step of the way helping you restore your identity.

Image courtesy of Flickr user Phillip Taylor.

David Rabinovitz

Identity Protection Consultant at IdentityForce
David is aligned closely with c-level principals and provides them with coaching services focused on strategy, finance, ownership, deal structuring, and shareholder relationships, which led him to join one of his high-growth clients as their CFO. As a high-energy executive with a wealth of experience, David is a versatile corporate “fireman” who skills are often sought after to assess and resolve complex business challenges, as he brings critical insight for business leaders in transition.He is also a long-standing Special Crew Volunteer for Pan-Mass Challenge, an annual cycling fundraiser that strives to provide Dana-Farber's doctors and researchers the necessary resources to discover cures for all types of cancer.

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