A Study of Consumer Acceptance of a No-Loss Credit Card Verification System

This research study focuses upon Credit Cards and a proposed verification method to reduce the risk of fraudulent use. It is anticipated that the proliferation and growing use of credit cards will require the use of security concepts offering built-in point of use protection that is automatic and reliable. A suggested concept is the use of a combined electronic credit card and a memory device. The proposed verification technique combines a user electronic credit card and memory number along with a simple imprinter which would be operated by the person accepting the credit card. Credit cards have become a widely accepted instrument of credit in the United States, and are a prime mover in the trend toward a cashless society . It is estimated that there are 300 million cards in use today; growing at a rate of about 20 percent per year. Their increased usage and acceptance portends considerable change in credit instruments of many segments of the business world. It is also anticipated that the problem of theft and unauthorized use will increase in proportion equal to or greater than the card growth. Thus, credit card user verification will become a most important factor in the trend toward a cashless society. In anticipation of the credit card user verification problem, the American Bankers Association established a Credit Card Verification Committee in 1967 under the direction of Mr. Norman McClave, Jr., a Senior Vice President of Chicago Northern Trust Company, and Mr. Bernard Ellis of the American Bankers Association. On July 1, 1967 a Verification Criterion was written. It established two levels of identification, the present honest face level which would accept the same risks as are now prevailing using a credit card which carries only a name, and a second level which would minimize or eliminate the risks by introducing an additional verification techinque to be used in conjunction with the present honest face level. The American Bankers Association suggested verification requirements include public acceptance, permanency, self-contained (single card), no duplication, machine processable without the help of any other individual, 100% accuracy, in expensive, and adaptable to high-speed processing. Prior to this Research Study, the provisions of the original 1967 Verification Criterion were reconfirmed in a May 26, 1970 letter from Mr. Bernard Ellis, Project Coordinator for the American Bankers Association. The proposed credit card verification technique in this study was specifically designed to meet the majority of requirements in the American Bankers Association Verification Criterion. This research was undertaken to determine the attitude of a present credit card user toward the proposed verification technique which utilized an electronic credit card, a user memory number, and a simple imprinter. In accordance with the American Bankers Association recommendations, the study was also designed to determine if the card owner telephone number or social security number would be acceptable as the card memory number. The Group Depth Interview, a situation where information is sought from a number of interacting individuals at the same time, using a combination of probing and direct inquiry techniques, was chosen as the research vehicle for the study. It was conducted using twelve sub-groups representing a demographic composition of the United States population. A hypothesis was established which would measure the acceptance of the proposed credit card system. Sub -hypotheses were established to measure the acceptance of a telephone number or a social security number to be used by the individual when presenting the credit card for use. The Group Depth Interview sessions were conducted by a moderator who referred to a pre-planned script to introduce the subject of credit cards and to elicit group participation in answering nine open ended questions. The sessions were tape recorded to investigate personal depth of feeling and to record the changing attitudes of group members under the influence of group dynamics. Research conclusions from this study, as determined from a 73 person, twelve demographic group sample, indicated that the majority of credit card users would accept the proposed system which would reduce the risk of fraudulent use by combining an electronic credit card with an owner social security memory number. Results of the study also showed that the combined credit card user group and non-user group would also accept the proposed system