Deal With AT&T; : High-Security Card Planned by Codercard

Codercard Inc. said it will design a new type of fraud-resistant, computerized plastic card that it hopes to market to banks, stock brokerages and government institutions for electronic fund transfers.

The Newport Beach company said AT&T; will supply it with “smart cards”--credit cards with a microchip embedded in the plastic. Codercard plans to develop a high-security version of the smart card to prevent fraud or counterfeiting.

Still in the early stages of development, smart cards can store information about checking, saving and credit accounts, as well as personal data. Manufacturers of the cards are promoting their use for cashless shopping, home banking and placing telephone calls. They are even being suggested for use as high-tech military identification that could store medical data and other information about a soldier.

Smart cards are said to offer greater protection against fraud than existing bank cards, which contain information encoded on magnetic strips.

Founded four years ago, Codercard has developed a device that functions as an electronic combination lock for computers, using computer logic to prevent fraud.

The market for such devices has been slow to develop, so the Newport Beach company has had few sales.

The smart card market is also in its early stages. Touted as the credit cards of the future, they are being used in France but have not caught on in the United States.

Last year, AT&T; conducted a national test of its smart cards for use as telephone credit cards. MasterCard and Visa have conducted consumer tests of smart cards for electronic shopping.

Under Codercard’s agreement with AT&T;, any smart cards sold by the county firm would carry the names of both companies, said Willis Marsing, Codercard’s president. He said he hopes the affiliation with AT&T; will enhance Codercard’s credibility with potential customers.

“I think it’s going to break down some sales barriers,” Marsing said.

The deal with AT&T; will not produce revenues for Codercard unless the Newport Beach firm can successfully market the products.

Marsing said Codercard hopes to have a product on the market within six months.

AT&T; will make its smart card technology available to Codercard, in exchange for the Newport Beach firm’s help in finding ways to make the cards more resistant to tampering, said Joseph Griffin, director of AT&T;’s smart card project.

AT&T; has no current plans to offer its smart card for telephone calls, but it is studying that and other potential applications, Griffin said.