Citibank, the nation's largest issuer of credit cards, has introduced credit cards with color ID photos of the holder embedded in the plastic in a bid to reduce fraud and counterfeiting.
Richard Srednicki, general manager of Citibank MasterCard and Visa, told a news conference Monday that neither current credit card holders nor new customers would be charged any increase in annual fees for the new Photocard.Citibank, the largest U.S. bank, has 20 million holders of classic and preferred MasterCard and Visa cards.
"A large proportion of the almost $1 billion lost yearly from credit card fraud comes from lost, stolen or not-received credit card fraud," he said. "And the fastest-growing segment in credit card fraud is counterfeiting."
Credit card fraud cost banks more than $115.2 million last year, up 60 percent from 1991, according to the Nilsen report, a Santa Monica, Calif., research firm for the credit card industry.
While credit cards with photo IDs have been available in other countries, Citibank is the first major U.S. banking institution to introduce photo ID credit cards. Two smaller banks, one in Massachusetts and the other in Hawaii, now offer credit cards with photos.
The Citibank concept was tested in Nevada, Florida, Washington D.C., and several banks in New York City, the bank said.
Current Citibank card holders may get a Photocard by mailing their own photograph in with an application or by simply walking into a participating branch to have their photos taken on site for free.
Citibank worked on the project for close to two years with Polaroid Corp. and DataCard Corporation.
Polaroid's CS-500 Color Photographic Scanner converts the card holder's image into digital information on a computer.
DataCard, a privately held company based in Minneapolis, developed the technology to encode Citibank's account data, imprint the digitized image onto the card, emboss the account number on the card and the photo, and overlay the image.
James Moar, president of DataCard Equipment, estimated the process to produce the card could take as little as 10 seconds a card.
Citibank would not disclose the development costs, but Srednicki said he believed the cost would be offset by increased use of the new cards and lower card fraud costs.
Michael Auriemma, managing director for the Auriemma Consulting Group that serves the credit card industry, said photo cards will prevent some but not most credit card fraud.
"It will help prevent stolen card fraud and `never received' fraud when cards are intercepted in the mail . . . assuming the merchant does his part and checks the picture," said Auriemma, whose firm is based in Garden City, N.Y.
However, the large part of credit card fraud is magnetic stripe fraud, usually practiced in Asia, where many counterfeit cards are created and used, he said.
Srednicki said Citibank was undertaking a merchant education program to ensure that merchants check the signature and the photo each time a credit card is used. An estimated 18,000 transactions take place per minute nationwide, he said.
The Photocard will not change the way card holders use the card to pay for purchases.
Applicants will get their new cards in about four weeks. Card holders will be able to have their photos taken at 98 bank branches in New York City, and other branches will offer it nationwide during the year.