The black technology behind financial cards, why is no current needed during use?

The well-known science education channel Veritasium released a video that thoroughly traces the evolution of credit card technology from early magnetic stripes to modern wireless contactless payments, revealing that its technological origins can be traced back to Cold War espionage listening devices. Host Derek Muller analyzes through physical experiments and interviews with multiple experts and records of early financial fraudsters how easily these everyday payment methods can be compromised.

Why do financial cards not require electricity during use?

By dissolving the surface layers of a credit card made of polyvinyl chloride (PVC) and polycarbonate plastic with chemical solvents such as acetone (the main component of nail polish remover), it can be observed that there are no batteries inside the card; it consists solely of a microchip and a looped copper antenna. Even if the outer shell is damaged, as long as the antenna structure remains intact, the chip still functions.

These contactless payment cards use Radio Frequency Identification (RFID) technology, whose core operation relies on electromagnetic induction. When the card approaches a payment terminal, the changing magnetic field generated by the reader passes through the card’s antenna, inducing an alternating current according to Faraday’s law of electromagnetic induction. This current is rectified into direct current, providing temporary power to the chip, enabling it to modulate the magnetic field and transmit transaction data. This design, which does not require an internal power source, ensures the card can reliably operate within its multi-year validity period.

Early financial fraud exploited flaws in magnetic stripe technology to clone cards.

The large-scale adoption of credit cards began in the 1950s, while magnetic stripe technology emerged in the 1970s, initially attaching the stripe to the card via heat pressing. However, magnetic stripe technology has significant security vulnerabilities: the data stored is static. In an interview, criminal Tony Sales pointed out that early criminals only needed a simple skimmer device to copy the magnetic stripe data in seconds and produce fully functional counterfeit cards.

Because the magnetic stripe contains static data without dynamic encryption, fraud rings previously employed service industry personnel to conduct large-scale skimming, causing enormous economic losses. Statistics show that in the early 21st century, annual losses in the UK alone due to magnetic stripe counterfeit fraud exceeded 400 million pounds. The static nature of the data, which is easy to fully replicate, forced the financial industry to develop more secure chip-based technologies.

How do banks prevent digital theft?

With technological progress, EMV chips with encryption functions and Near Field Communication (NFC) have become mainstream. Although concerns exist that criminals could use mobile phones or specialized radio devices (like Flipper Zero) to conduct “digital theft” in crowds, technical analysis indicates that their profit efficiency is relatively low.

Modern contactless transactions use dynamic codes, with each transaction generating a one-time encrypted code. Criminals cannot access the private keys stored within the chip’s secure element, making it difficult to clone reusable cards. Additionally, the CVV three-digit verification code on the back of the card is not stored in the chip’s sensing data, limiting its use for online shopping after illicit data acquisition. Coupled with transaction limits set by various countries for contactless payments, the current mechanisms effectively prevent large-scale account theft.

The Cold War legacy and its lessons for modern security

Interestingly, the physical prototype of modern RFID technology can be traced back to The Thing, a Soviet espionage device developed in 1945, which was hidden inside a wooden carved emblem given to the American ambassador. It lacked a battery and was powered by external radio waves at specific frequencies. This “passive sensing” physical principle was transformed decades later into financial payment technology.

Even though current mobile payment systems like Apple Pay incorporate biometric authentication to enhance security, experts warn that as communication technologies evolve, new and more complex attack methods continue to develop. From magnetic stripes to chips to contactless sensing, the history of payment technology is essentially a continuous struggle between encryption and physical hacking.

This article, “The Black Technology Behind Financial Cards, Why Don’t They Need Electricity When Used?” first appeared in Chain News ABMedia.