When Alberto Gonzalez and his ring of credit card thieves struck, over 46 million cardholders had their information stolen. Luckily, thanks to limited liability guaranteed by federal law, individual consumers did not see much damage from this. The banks, however, got dinged.

Take Fifth Third Bank, for example, which got fined $880,000 by Visa for failing to update its system which helped Gonzalez and his cronies make off with millions of credit card numbers. And while this particular gang of thieves is behind bars now, that certainly doesn’t mean that the war on identity theft is winding down.

Check out the latest news:

• Credit Cards Stolen From Brevard Hospitals, Medical Offices
• Credit cards stolen from employees at Lake Elmo Elementary
• Police: Hancock shoppers are card theft victims
• Gulf Shores accuses former accounting clerk of theft
• Huntsville Police see rise in identity theft
• Local Girl Scout employee charged with using fellow employee’s stolen credit card for spending spree

I could go on, but I won’t.

In response, more banks are looking to provide more secure options for their cardholders. This is good for them as well as us. Fifth Third recently signed on with RevolutionMoney, purveyors of the RevolutionCard and the Revolution MoneyExchange (a PayPal alternative). The RevolutionCard differs from your typical Visa or MasterCard in that it uses a PIN rather than a signature. So, would-be credit card thieves would need to steal your card number as well as your PIN in order to make a purchase.

This is seemingly more secure than signature authorizations. For credit card purchases, thieves can go ahead and forge your signature and as long as the clerk doesn’t compare the signature to the one on the back of the card (and when do they ever?) it’ll go through. The fraudulent charge isn’t rectified until you dispute it and by then, the money and the crook are gone. You get your money back, but the bank is out of luck.

So, really, the PIN protection of the RevolutionCard is better news for the banks, like Fifth Third, than the consumers. But one interesting and relevant perk that comes with the RevolutionCard: no interchange fees. Here’s what a Business Wire press release says:

With no interchange fees, RevolutionCard creates substantial cost savings for merchants – savings they today are passing back to consumers in the form of loyalty programs and incentives. As the first PIN-based credit card,RevolutionCard provides cardholders peace-of-mind knowing that if they lose their card an unauthorized person cannot use it without their PIN. Additionally, RevolutionCard reduces the chance of identity theft as the card does not display a cardholder’s name or signature. These consumer-oriented security features benefit merchants by helping to reduce chargeback and fraud risk.

We’ve heard that “savings will trickle down” before – whether or not that’s true is hard to measure and remains to be seen. But it is notable that the RevolutionCard seems to provide more protection for merchants and retailers, who are often independent franchisees and small business owners. And now as big banks, merchants and card issuers are equally feeling the strain from identity theft, it’s likely that we’ll be seeing card companies beef up their security measures. In fact, we’ve already seen European nations embrace the Chip and PIN card, which integrates a security chip as well as requiring a PIN for authorization and renders many U.S. credit cards obsolete.

RevolutionCard and other PIN cards may be the “missing link” between a credit card system that authorizes by signature and the next evolution of identity theft prevention technology. Luckily, there are numerous merchants that already accept the card in the U.S. and you can easily apply for one online. True, requiring a PIN for purchases isn’t particularly innovative (after all, that’s how debit cards work already) but the shift  may be a first step towards a big change in the way we check out at the register.

I say “first step” because it is important to note that a PIN isn’t foolproof. We already have a set of security numbers that is designed to protect us from fraudulent purchases – it’s called the CVV code and they are the 3 little numbers on the back of your card. Merchants aren’t allowed to store these numbers, just like they aren’t allowed to store PIN numbers, but that won’t stop skimmers and phishers from tricking you into handing them over as well. Getting you to disclose your PIN number to the wrong person could just as easily be done.

What are your thoughts on the RevolutionCard? Would you use a PIN-based credit card? Would it make you feel safer? Is the PIN mightier than the pen?

Image by MShades

Related posts:

1. Identity Theft Part I: Tricks of the Trade
2. Stealing Your Cards The Low-Tech Way
3. How to Protect Yourself From Credit Card Skimming
4. Do You Own a P.O. Box?
5. Futuregoof: 4 Grand Frustrations in Credit Card Technology