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Investors raise $70M for Harmar credit card innovator Dynamics

| Monday, Dec. 8, 2014, 11:30 p.m.
Dynamics Inc.
Dynamics Inc.’s advanced payment cards include a display that keeps card numbers hidden and buttons for entering a PIN to unlock the card.

Dynamics Inc. said a group of investors that includes MasterCard has invested $70 million in the company, highlighting interest in its next-generation payment cards as a result of of high-profile breaches that compromised consumers' data.

The Harmar-based company said that as part of the deal, it will supply cards with enhanced security and other features to MasterCard and the Canadian Imperial Bank of Commerce, which joined with Bain Capital Ventures and Adams Capital Management in the fundraising round.

Dynamics CEO Jeff Mullen said the card, which has five buttons that customers can use to enter a security code, should be available next year. The technology is one of the advances that the credit card industry is exploring as a way to prevent fraud.

“In order to turn the card on, you have to enter an unlocking code,” Mullen said. “If the card is lost or stolen, it's a dead piece of plastic.”

Mullen said the money will be spent to hire workers, expand sales around the world and increase manufacturing capacity. A 2011 fundraising round generated $35 million, led by Bain Capital.

Founded in 2007, Dynamics is growing quickly. It hired 100 people in the past six months — doubling the size of its workforce to 200 — and is looking to add another 50 workers as soon as possible, Mullen said.

Growth is being driven by demand for credit and debit cards with greater security, along with interest by credit card companies and banks in giving consumers more features on their cards.

MasterCard said it is looking to invest in technologies and companies that help its cardholders.

“In working with Dynamics, we have secured a partner with deep technology capabilities and market-leading manufacturing capabilities to help drive innovation in the interactive payment card market,” said Carlos Menendez, a MasterCard group executive.

Dynamics' cards are compatible with the three major card-reading technologies: the traditional magnetic strip; contactless cards that users tap against a machine to send payment information; and a newer technology in which a chip in the card communicates with the payment terminal.

The chip technology is common in Europe and is being pushed in the United States because it is considered more secure than magnetic strips.

Target Corp., which last year said hackers stole millions of customers' credit and debit card records, is spending $100 million to replace its store credit and debit cards with the chip technology.

Several national retailers, including Walgreens and The Home Depot, are making similar moves.

The White House in October announced President Obama had signed an executive order requiring government credit cards to use chip technology and to upgrade payment card terminals at federal facilities.

Dynamics' cards allow users to pick between debit or credit accounts for each transaction and can be set up for multiple rewards programs from which the user can select, Mullen said.

“Interactive payment cards give cardholders an unprecedented level of customization, control and security at each and every purchase at any point-of-sale device in the world,” he said.

Alex Nixon is a staff writer for Trib Total Media. He can be reached at 412-320-7928 or anixon@tribweb.com.

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