Banks fail to give credit to fake smart card 'genius

Serge Humpich believed he held a secret that could do more damage to the banking system than a dozen Nick Leesons. A self-styled electronic genius, Mr Humpich claimed to have perfected a false credit card that could talk any cash terminal into handing him an unlimited supply of money.

His mistake was to offer his invention to France's top banks for £20m. Instead of making a fortune he found himself in court yesterday faced with a possible seven years in prison and a fine of £500,000.

Mr Humpich, 36, claimed that the coded numerical system that can pick out all 35m French PINs on Visa and other plastic cards could be cracked by using a home-made smart card that could lie its way through the most complicated numerical traps.

"I didn't discover a crack in the system," he said before appearing in a Paris court. "I showed the card company managers that the entire system from A to Z was unsafe. The group which controls the use of credit cards did not believe me so I showed them how I could fool any terminal by cracking the basic mathematical formula based on 96 numbers."

Mr Humpich, who has been sacked as a computer expert since his arrest, said he had no intention of stealing. He told banks that if he could crack the system anyone else could do the same and he was ready to help them close the security gap.

"I could have put a page on the internet which would have enabled other computer programmers to make their own cards from blanks fitted with a microchip," he said. "They could have made purchases in any store and emptied cash dispensers. They would not even have needed to know PINs."

All French credit cards are equipped with microchips so that payments can be made through a special terminal, resembling a mobile telephone, found in most shops and restaurants. Users tap in their own code and the amounts are immediately deducted without the need to sign an authorisation form. This has made it easy to use stolen credit cards, as long as the PIN is known, without producing identification.

Mr Humpich decided that the quickest way to cash in on his discovery was to send a lawyer to the bank card control group to negotiate a cash payment. To prove that his system worked he bought 10 Metro tickets from an automatic dispenser with a false card without being detected and sent the receipt to the credit card company.

At first the banks played ball and asked him to make copies so that they could test them, but in September, three months after making contact, he was arrested by 10 policemen and held in custody. The charge against him, based on the Metro ticket purchase, accused him of using forged credit cards.

"We consider the whole affair a form of blackmail," a banking spokesman said. "We don't believe he fabricated anything that endangered the security of our microchip cards. For two years he threatened a catastrophe that never came."

But his lawyer, Francois de Saint-Cyr, said Mr Humpich had no case to answer.

"He really could fool the whole system and did the honorable thing by offering to provide a defence to the banks," he said.

"The banks took the message and have just overhauled the entire network without his help and introduced new cards which they say are foolproof."