Dynamic Security Code System for Payment Card Fraud Protection
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Solution Overview
Problem
Current payment card security systems are vulnerable to Card-Not-Present (CNP) fraud due to static security codes, which can be stolen and reused for fraudulent transactions, and existing dynamic code solutions are costly, fragile, and prone to desynchronization.
Innovation Solution
A Dynamic Security Code (DSC) System that generates and updates security codes dynamically, either by a server or on-card algorithms, allowing for secure, cost-effective, and robust protection against CNP fraud, compatible with existing payment infrastructure and usable in various transaction environments.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If static security codes are used on payment cards, then the system is simple and compatible with existing infrastructure, but the system becomes vulnerable to Card-Not-Present (CNP) fraud
Solution Approach 1:
The patent implements dynamic security codes that change over time or after a certain number of uses. The security code is no longer static but dynamically generated based on transaction context, time, or usage count, making each code unique and preventing reuse in fraudulent transactions.
Solution Approach 2:
The security code parameters are changed from static to dynamic. The code varies based on multiple parameters such as transaction timestamp, sequence number, or cryptographic keys, transforming the security mechanism from a fixed value to a multi-parameter dynamic system.
2Reliability
If time-based dynamic security codes with real-time clock and battery are implemented, then fraud protection is improved, but the card becomes more fragile, expensive, and has limited lifetime
Solution Approach 1:
The patent removes the battery and real-time clock components from the card. Instead of generating codes locally using time-based algorithms, the system extracts the time-synchronization function to an external server that provides time-based one-time passwords without requiring power sources in the card itself.
Solution Approach 2:
An external server acts as an intermediary between the card and the authentication system. The server handles time synchronization and code generation, mediating the authentication process without requiring complex hardware in the card. The card simply receives instructions and displays codes provided by the server.
3Reliability
If time-based dynamic security codes are used, then fraud protection is improved, but the system becomes prone to de-synchronization with the server
Solution Approach 1:
The system implements feedback mechanisms where the server continuously synchronizes time with the card through periodic communications. The server can detect and correct time drift, and the card can request time synchronization during transactions, ensuring both parties operate with consistent time references.
Solution Approach 2:
The server performs preliminary time synchronization before generating security codes. By establishing an accurate time reference in advance and providing buffer time windows for code validation, the system prevents desynchronization issues before they affect authentication.
4Device complexity
If security codes are printed on the card, then the system is simple to implement, but the codes can be stolen and reused for fraudulent transactions
Solution Approach 1:
The security code transitions from a static printed value to a dynamic displayed value that changes with each transaction or time period. The code is generated and displayed on an electronic display rather than being permanently printed, ensuring it cannot be stolen and reused.
Solution Approach 2:
Instead of printing the security code directly on the card, the system uses an electronic display to show the code temporarily. This creates a transient copy that exists only during the display period, preventing physical copying or theft of the code.
Data Source
AI summary
This invention is a comprehensive “Dynamic Security Code” (“DSC”) System (“DSC System”) that can change the security code of a prepaid, debit, or credit card (“Payment Card”). In an effort to thwart Card-Not-Present (“CNP”) fraud, the DSC System provides dynamic security code values (“DSC Values”) that have a limited use. The DSC Values provided by this DSC System can be calculated by various methodologies and can be used within existing standard payment card infrastructures. The DSC System can also be used with other form factors and in other environments not related to payments such as balance inquiries. The DSC Values can be calculated by a DSC Generator Server or on the card itself.