Programmable Credit Cards: Even More Ways To Spend What You Don't Have

Is your wallet so stuffed with credit cards that you need a hydraulic press to close it? Do you have such an assortment that you could wallpaper your bedroom and have enough left over for the bath? Then you're just the person the financial services industry will target with programmable credit cards.

In theory, a single credit card-sized device could replace dozens of pieces of plastic, or, as Citi (C) is about to do next month, combine credit card and customer loyalty program points so a consumer can choose either method of payment at checkout time.

The technology from Dynamics (which scored $5.7 million in start-up funding just over a year ago) adds a battery, semiconductor, and buttons to a normal credit card that allow the holder to change the information recorded on the magnetic strip. A card reader would then get whatever data was in place for validation. That would allow the one card to appear like different ones, depending on what the user chose.

In Citi's case, the consumer pushes one of two buttons. One makes the card act like a normal credit card. The other lets you make a purchase with customer loyalty points, rather than forcing you to redeem them at a web site. Here's a short video (edited from Citi-provided content) that shows how it works:

Dynamics has a third variation as well: its so-called hidden card. It comes with five lettered pushbuttons, much as you might see on the door handle of an automobile. A number of digits in the credit card are replaced with a thin digital display. The user enters a pass code on the card. Only then do all the numbers show and actually appear on the magnetic stripe, so the card can be used.

Because it works with normal card readers, Dynamics has avoided the chicken-and-egg problem that would result if merchants and credit card processing services needed to update their technology. Of course, some concerns come to mind. Could thieves get a card and somehow obtain access to all the numbers on it? And what happens when a credit card issuer sends a new card? How does the programmable card get an update?