Magneprint technology licensed to TRAX Systems, Inc.

Boon to security

Washington University in St. Louis has licensed a system developed by Washington University engineers that is meant to detect counterfeit credit cards by reading a unique magnetic “fingerprint” on the stripes of credit cards and other objects that carry magnetic information.

The system — called Magneprint — was invented by Ronald Indeck, Ph.D., Das Family Distinguished Professor of Electrical Engineering at Washington University. Indeck is the director of the Center for Security Technologies at Washington University in St. Louis. The Center for Security Technologies addresses fundamental questions in the design of advanced security systems. The Center’s approach concentrates on the ability to discover, assess, and avoid potential problems and threats to security arising from both malicious planned attacks and natural events.

Ronald Indeck and colleague Marcel Muller made a striking find in the early '90s that has led to the University's licensing technology to a leading security solutions provider.
Ronald Indeck and colleague Marcel Muller made a striking find in the early ’90s that has led to the University’s licensing technology to a leading security solutions provider.

Magneprint is licensed to TRAX Systems, Inc., a security solutions provider in California.

Each credit card’s stripe has millions of magnetic particles that are organized in a unique way. Magneprint analyzes these particles and determines the card’s “signature” number, which then can be put in a database.

When a card is swiped through a designated terminal, the card’s signature, or “Magneprint,” can be compared to the recorded signature. If the signatures do not match, the transaction can be rejected. The Magneprint represents a unique “fingerprint ” of the magnetic stripe.

In 1994, Indeck and his colleague Marcel Muller, Ph.D., research professor of electrical engineering, made one of the most striking engineering insights of the decade: collections of magnetic particles have a characteristic signature as unique as a human’s fingerprint. This signature, they found, can be used as positive, authentic identification of any object or document that carries magnetic information — from credit cards, bank checks, cardkeys and security cards to music and data tapes and other computer software. The marketing of Indeck’s discovery could eliminate most of the estimated $5 billion lost to credit card and check fraud each year in the United States.

A few years later they connected with MagTek, Inc., a leading U.S. maker of magnetic stripe card readers. Credit card issuers were experiencing a great deal of “cloning,” in which a valid account is encoded on a fake card. Could this technology, MagTek wondered, be used to authenticate credit cards, debit cards, or any card having a magnetic stripe such as IDs and driver’s licenses?

A system is born
The university team got working on the problem. Soon they demonstrated a modified card reader that could identify cloned cards by reading the magnetic fingerprint on its data stripe. MagTek licensed the technology and developed an end-to-end product. The MagnePrint® system was born.

In late 2002, MasterCard International completed a large-scale trial of the system, involving 500 points-of-sale, 60,000 cardholders, and one million transactions.


“The performance was outstanding — no fraudulent cards passed through the system without being caught,” Indeck said. “That was a key moment, and we were very enthused at that point. It’s gratifying now to see TRAX Systems come into the picture.”

Around the Spring of 2003, two Los Angeles-based entrepreneurs, Bruce Gretz and Neven Karlovac, heard about MagnePrint as a result of a security consulting project they were working. They learned that the same fingerprint properties apply to many other magnetic media, such as magnetic ink. The university researchers showed them a demonstration using marks made with magnetic laser toner (widely used for printing bank checks).

Here was an extremely inexpensive way of uniquely marking printed material—and because the marks were as random as a fingerprint, they were impossible to counterfeit. Gretz and Karlovac convinced the university that they could commercialize this technology for authenticating and tracking packaged goods. They founded TRAX Systems and by early 2004 had closed an exclusive, worldwide license from the university in this field.

Solutions for branded goods
TRAX Systems now is developing solutions based on this magnetic fingerprint technology. Magnetic ink is used on the packaging materials. The fingerprints are read during production and placed into a reference database. At any later time the fingerprints can be read with a hand-held scanner and matched against the references. Goods are uniquely identified and therefore authenticated when a match is found. Assuming that counterfeiters have been clever enough to place magnetic marks in the same location, the chance of any of them matching the database is near zero.

An anti-fraud system using this approach gives several valuable benefits not found with current technologies. First, it performs item-level identification and authentication simultaneously. Most do one or the other, but not both. Second, the mark cannot be counterfeited. Third, no security is required in the materials supply chain. Most authentication systems rely on special tags, so they are compromised if a shipment is lost or stolen. The TRAX Systems approach uses commodity supplies; the mark is not secured until scanned by the customer. Finally, the system is very low-cost — the cost of printing the marks nears zero as the unit volume rises.