System for preventing fraudulent use of credit card

A card for use in a transaction comprising a base and means on said base having readable information thereon, wherein said readable information comprises a card test and an encoded text which is generated as a function of said card text given to a user and a password such that said encoded text corresponds exclusively to the card text and the password for the card.

Apparatus for use in performing a transaction comprising means for receiving information from a user, said information comprising a pass code, a card text, and a first encoded text, wherein said first encoded text being generated by an encryption algorithm from said pass code and said card text, means for generating a second encoded text by applying said pass code and said first text to an encryption algorithm identical to that used to generate said first encoded text, and means for comparing said first encoded text to said second encoded text;

• said means for generating a second encoded text comprises means for producing a key and a first clear text from said card text and said pass code and for applying said first clear text and said key to said encryption algorithm to produce said second encoded text;
• means for producing a verification code means for producing said verification code comprises means for applying said card text, said pass code, the time and data of the transaction and a merchant text to an encryption algorithm.

Apparatus for verifying a transaction comprising means for receiving a merchant text which identifies a merchant, a card text which identifies a card used in the transaction, a first verification code, and the time and date of the transaction from a transaction receipt, means for retrieving a password corresponding to said card from a database, and encryption means for applying said password, date, merchant text, and card text to an encryption algorithm to produce a second verification code, and means for comparing said first and second verification codes.