SUNNYVALE, Calif. – Now it's up to the members. After a successful trial run, National 1st Federal Credit Union is officially rolling out a smart card reader its backers say provides an inexpensive but formidable barrier to crackers and hackers and keystroke readers who would break in and steal account numbers and more over the Internet. The device is called the OnhandID smart card reader, and it's the brainchild of Onhand Virtual Access Inc., whose co-founder, Mike Angelinovich, is a Silicon Valley veteran of the credit card industry and longtime member of National 1st. Standard security calls for two steps to access an account: an ID number and a password. The smart card adds a third level to that by constantly changing account passwords. "There's no software involved. This is just a plug-and-play way to thwart what's become the weakest link in online security, keyboarding. Scriptwriters can exploit that vulnerability very easily . they can even fool firewalls and other intrusion protection programs because they look like they're doing something legal," Angelinovich says. About 100 volunteers from among employees and members of the $157 million CU gave the cards and their readers a test, and now about 9,000 of the credit union's 17,700 members will receive a notice about the new service in their next statement. "It's nice that we have a group of employees and members who have been vocal about issues and like to try things out. Everything went very smooth, with just a few minor glitches that we were able to take care of right away, and employee and member acceptance was just great," says National 1st's longtime president, Marcia Franks. "Now, we're hoping to create a demand for them." Franks says the first 250 will be distributed for free, after which the CU will charge $7 each. "I'll be honest with you, I'm not sure the membership in general will at first understand the significance . that no one can get into their accounts and to their confidential information . and that we have it available to them," she says. "Now it's up to the members to decide whether to protect themselves." Even with its generally tech-savvy member base (National Semiconductor is its primary SEG) in the heart of the Silicon Valley, Franks says she thinks it could take a major event somewhere at a bank or credit union before consumers would be inclined to snap up the devices. The Onhand ID smart card reader is the result of about 18 months of development, with Atmel Corp. of Colorado Springs providing chips and modules and HANA Microelectronics in Thailand providing the readers and embedding the chips in the cards, which themselves can be protected by passwords or biometrics, Angelinovich says. Franks put Angelinovich together with PM Systems Corp., the CU's internet banking vendor, and that firm developed the interface that connects the reader to the online banking system. The result is a smart card reader that costs about $5 to $7 each for a credit union to supply to a member. Such readers generally cost twice that much or more. And unlike other smart cards, this reader plugs into the microphone port on laptops and PC's, leaving USB and other ports free for printers and other, more-commonly used peripherals. Angelinovich says a couple other credit unions are close to signing up for the service, and he continues to be optimistic about the future of his company and the OnhandID smart card reader. The next step is to push for its potential adoption beyond the credit unions using PM Systems' WebFederal2 platform, Angelinovich says. Work also continues toward making the chip part of standard debit card, which would broaden its use. "It's a very good feeling. It's taken a lot of time, but stuff like this doesn't happen overnight. It's taken a lot of work and coordination with a lot of people, because we're doing something that's being done for the first time," Angelinovich says. -

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