A Brief History of the Microchip Payment Card

In the previous part, we talked about the history of the magnetic tape payment card. In this article, we will continue our story. But we will talk about plastic cards with embedded chips and other promising technologies in this area.

The real patent race began when the idea of ​​adapting another electronic storage medium to a payment card than a piece of tape was born. Such a carrier was already known. It was a so-called integrated circuit based on a tiny silicon semiconductor crystal, which is now called a chip, a microprocessor, and half a dozen other terms, depending on its application.

A patent application for the principle of operation of the integrated circuit was filed in 1959 by Jack Kilby of Texas Instruments (now the market leader in microcircuits for mobile devices), his patent (US3138743) was approved in 1964. In the meantime, microprocessors were actively developed in many countries, including ours, where mass production of semiconductor chips began in 1965.

And the first patent application for the use of a silicon semiconductor in a payment card was filed in 1966 by the head and owner of a small private company DATEGE in Munich, Helmut Gröttrupp (German patent No. cards or identity cards ”with a priority of December 1966), a very interesting person, by the way, with a difficult fate.

A graduate of the Technical University of Berlin in 1939, Helmut Gröttrupp, three years later, already headed the department for radio control of rockets at the Wernher von Braun rocket center in Peenemünde. In 1945, having been captured by the Americans and waiting to be sent to the United States, he secretly, through his wife, asked the Soviet command to send him and his family to the Soviet Union. Here he participated in the creation of the first Soviet ballistic missile. In 1953 he returned to Germany and there he no longer returned to rocket science, but became interested in a new field of information technology for himself, where he also succeeded.

In the late 1960s, he filed a total of four patent applications for chip cards with the German Patent and Trademark Office, the last two in 1968 and 1969 for “Active credit cards provided with a means of personalizing their user with a PIN input/comparison system.” code” – co-authored with his investor, the Hamburg engineer Jürgen Detloff. Later, in addition to the German ones, they received UK patents (GB1317915 and GB1318850) and the USA (US3678250).

And since the beginning of the 1970s, there has been a real wave of patent applications for microchip storage media on payment and ID cards. For example, Roland Moreno from France alone filed 47 such patent applications, the first of which, in 1974, had a microchip embedded in his ring. IBM was also noted here by the patent of its employee Paul Castrucci from the Vermont branch of the corporation. According to the engineer Castrucci himself, for him this invention was a by-product: “In 1966, Bob Henley (Castrucci’s colleague – Ed.) and I rolled up our sleeves and invented semiconductor memory. By Christmas, our 16-bit plates were tested, and in 1966 our computer with them was sent to the NSA.

In other words, the engineers Castrucci and Henley designed a computer with semiconductor chips for the US National Security Agency. And when the boom in patent applications for microchips for payment cards began, Castrucci filed an application for his version of the microchip, why not apply if there is such an opportunity and relevant developments? As he writes in the Claims section of his application: “In addition to the standard credit and personal information, security code information can also be entered and stored in the monolithic solid-state memory (chip – Ed.) of the card. To activate the card, you need to insert it into the terminal and enter the appropriate security code from the keyboard of an autonomous station or in a conventional computer transmission system … If the code data matches, the card activates the central data bank and confirms the transaction ”(patent US3702464 with priority dated May 4, 1971).

As the “father” of the magnetic card, Jerome Svigals, recalled, the greatest difficulties for his offspring – magnetic stripe cards arose in the mid-1980s, when industrial technology for manufacturing smart cards finally appeared. “In Europe and in some other regions outside of North America, smart cards based on microchips have almost completely replaced magnetic stripe cards, but in the US and Canada the latter are still quite popular,” he wrote in 2012 and continued with undisguised sadness. . “But the end of magnetic stripe cards is just around the corner. Emerging smart phone payments and near field communication (NFC) radio frequency bands are gaining popularity and are likely to eventually replace the venerable credit cards, even in North America. And as we stand on the threshold of a new era, the era of high-tech transactions, it’s time to sing the praises of those forgotten engineers who were behind the creation of the technology that was so amazingly successful.

It is difficult to add anything to this. Is it just that in our country the first domestic Eurocard / MasterCard card with its own logo was issued by Vnesheconombank and solemnly presented by the leadership of the organization to General Secretary of the Central Committee of the CPSU Mikhail Gorbachev, who turned it in his hands, but did not put it in his pocket, but gave it to the guards and ordered take it to the museum. Payment cards reached the people only in the 1990s. First, in 1992, to those citizens who could make a deposit of $15,000 of their hard-earned money on a deposit in the commercial Most Bank, which began issuing VISA credit cards, and by the end of the 1990s, to everyone else.

As for the fact that we are on the verge of a new era of high-tech transactions, the next step on the path of magnetic tape-chip-radiochip may be what, for lack of its own name, is still called “biotechnology”, meaning the reading of biometric personal data (primarily sequence of fingerprints and iris pattern). Fingerprint (Touch ID) and iris scanners are already built into some models of modern smartphones, so there are no unsolvable problems along the way.

And then it seems that things will come to DNA identification, there is also no fundamental obstacle, as long as the enthusiasm of the inventors is restrained only by the relatively high cost of PCR (the procedure for repeatedly copying DNA sections to an amount suitable for analysis). But as soon as it drops to an acceptable threshold, there will be terminals and ATMs with a receiver of biological fluids, in which all you have to do is spit to complete a transaction. No need to laugh here, Mrs. Parry’s iron was also laughed at first. But where did he take us?

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