Thanks to David Birch, I just watched this one hour episode about the history and development of bank cards, hosted by Professor Hannah Fry on the BBC.
I’m well aware of how cards started which dates back to when Frank McNamara forgot his cash and check book and created Diners Club back in the 1940s. This was followed by the Fresno Drop in the 1950s, when Bank of America gave customers a card that had pre-authorised credit limits and which, later, became Visa.
But I found the programme interesting as I hadn’t realised how magnetic stripes, Chip and PIN and contactless payments were tied to the CIA and KGB.
*SPOILER ALERT*
Let’s start with the mag stripe or, if you prefer, the magnetic stripe you find on your cards. This was created by IBM in the 1960s. At the time, it was for the CIA who wanted a secure way of issuing identification to employees to gain access to their buildings. The solution was the magnetic stripe on a card, attributed to IBM engineer Forrest Parry.
However, it turns out it was his wife’s idea.
Dorothea Parry was talking about the ID requirement with her husband and realised you could iron the magnetic strip onto the card.
In 1960, while at IBM, Parry invented the magnetic stripe card for use by the U.S. Government. He had the idea of gluing short pieces of magnetic tape to each plastic card, but the glue warped the tape, making it unusable. When he returned home, Parry's wife Dorothea was using a flat iron to iron clothes. When he explained his inability to get the tape to "stick" to the plastic in a way that would work, she suggested that he use the iron to melt the stripe onto the card. He tried it and it worked. The heat of the iron was just high enough to bond the tape to the card.
Who would have thought?
Similarly, Leon Theremin invented contactless back in the 1940s. Using RFID, or radiofrequency identification, he placed a bug in a plaque given to the American Ambassador. Called The Thing, the device was embedded in a carved wooden plaque of the Great Seal of the United States, and then used by the Soviet government to spy on the US from 1945 to 1952.
Fascinating stuff.
The programme also delves into the life of Roland Moreno, a French inventor, who created the idea of Chip & PIN. The chip in a card, la carte à puce, first appeared in the 1970s. Today, it is everywhere and he died a French hero, being awarded the Légion d'Honneur in 2009.
There’s lots more in the programme that engages, although I was surprised they didn't mention James Goodfellow, the inventor of the ATM and PIN. Meantime, it does mention a lot of the work of Visa.
Visa process a transaction in 300 milliseconds, with 700 million transactions a day. Each of those transactions requires a check of who you are, whether you have funds and whether the details are correct. That’s quite a challenge, especially as the company regularly has to detail with enumeration attacks.
Enumeration attacks are “when cybercriminals use brute-force methods to check if certain data exists on a web server database”.
As Visa explains: “it’s a war between their AI versus our AI”. Nice context.
There’s more in the programme which I can recommend to you, if you have an hour to spare. It was worth it for me.
Postnote: I was interested to see "Britain's greatest fraudster" Tony Sales featured in the show, as he's a long-standing supporter of my network.
Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...
