How Sour Notes Can Fight Credit Card Fraud

What's noise to one person is music to another. In fact, the "noise" in the magnetic strips on credit cards could soon be sounding sweet to banks by helping them cut down on credit-card forgery. Researchers at Washington University in St. Louis, led by Ronald S. Indeck, an electrical-engineering professor, discovered that even tiny patches of magnetic media contain a pattern of minute magnetic particles as unique as a fingerprint.

Today's credit-card readers are designed to screen out the noise caused by these particles and concentrate on the recorded data. But with an inexpensive semiconductor chip, readers can pick up and analyze the noise signal, extracting a card's magnetic fingerprint to verify whether it is genuine. The technique can't prevent stolen cards from being used, Indeck concedes, but credit-card forgery now costs banks hundreds of millions a year. Lowy Technologies LC, a St. Louis tech-transfer company, is negotiating with the university to act as its licensing agent.

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