Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, January 1, 1992 TAG: 9201010198
SECTION: BUSINESS PAGE: A-9 EDITION: HOLIDAY
SOURCE: The Baltimore Sun
DATELINE: COLUMBIA, MD. LENGTH: Medium
CREDIT CARD SYSTEM VERIFIES SIGNATURES
For the shopper, it's just a nuisance: the messy, multipage forms that must
be signed and separated - with copies for everyone and a messy carbon for no
one - each time a credit card is used.
But for industry, the paper-clogged system used in credit card transactions
is a major expense. Millions of slips of paper must be tracked and stored and
then retrieved each time a bill is questioned.
"It's a pain in the neck," said a spokesman for Citicorp., America's
largest credit card issuer, with 30 million cardholders.
But Capital Security Systems Inc., a Columbia security company, thinks it
has a solution that, if tests prove successful, could greatly simplify credit
card use and ease that pain in the neck of credit card companies. It also
could mean tens of millions of dollars for Capital Security.
The heart of the system is a book-size electronic pad and an attached pen.
When someone signs his name on the digitalized pad with the electromagnetic
pen, the signature is broken down into various characteristics that can be
read by a computer. This allows the signature to be stored, transmitted and
even verified to prevent fraud.
Capital Security, through its Digital Signature unit, has entered into
pilot agreements to test the system this year.
The system allows customers to charge their purchases by presenting their
card and signing on the pad. The computer will add information from the cash
register and spit out a receipt - with a facsimile of the signature - for the
customer to take. Electronic copies are kept by the store and transmitted to
the credit card issuers.
"Everyone says that is `Star Wars' stuff. Well, Star Wars is here," said
Donald E. Perkins, the president of Capital Security and Digital Signature.
Perkins said that the pad and pen unit will sell for about $300 when mass
produced and bought in volume.
The company estimates that $4 billion is spent each year in the United
States on handling charge receipts. Moreover, consumers challenge about
one-half of 1 percent of all charges and credit card companies are unable to
produce the necessary receipts in about one-third of those cases, Perkins
said.
Original signatures usually are preferred in legal disputes, but the law
recognizes electronically produced copies as a "next best" alternative that is
binding, he said.
Citicorp is testing a similar system, made by a competing company.
"It's a terrific idea," Citicorp spokesman Bill Aheran said of the
paperless charge systems.
"The basic benefit is that it speeds up the whole process," Aheran said.
One of the chief complaints of credit card users is that it takes so long to
get a charge form filled out and have the charge authorized, he said.
Moreover, Perkins said, his system can reduce the billions of dollars of
credit card fraud committed each year. With extra software, Sign-On can verify
if a signature is genuine. It does this by encoding 13 characteristics of a
signature, from the way and speed the letters are formed to the shape of the
letters.
The system will even update the "master" signature in its file each time it
is used, allowing for changes in people's handwriting over time.