Debit or credit, airline miles or cash back -- the option could be in a button on your card. By Karen Mracek, Associate Editor November 8, 2010 Smarter credit cards are on the way. Citi has launched its 2G card, which allows customers to redeem points or cash rewards with the push of a button at the time of checkout. The card, available only to select cardholders at first, is the same size and shape as a normal credit card, but it features a battery, an embedded chip, two buttons and a card-programmable magnetic stripe. “Customers now get a credit card that better fits their lifestyle and needs, putting more options right in their hands,” says Terry O'Neil, executive vice president of Citi's North America Credit Card division. Citi is using technology developed by Dynamics Inc., a Pittsburgh start-up, for the pilot program. It will gather customer feedback with plans to offer the cards on a larger scale in 2011. Dynamics has several other smart cards -- including one that lets customers choose between multiple accounts when paying for items. Pressing a button automatically reprograms the card's magnetic stripe, which is then swiped in a retailer's credit card machine. New cards will also let customers switch between debit and credit transactions, and even improve the security of their cards. Advertisement Dynamics has a card designed to protect consumers against skimming by automatically writing a new security code onto its magnetic stripe for every in-store purchase. A display can also be added to the card for online purchases, replacing the three- or four-digit security code physically printed on traditional cards. MasterCard partnered with NagraID Security, a Swiss company, to offer debit and credit cards to European customers with a small display that provides a one-time password for additional security. It also has a touch keypad with up to 12 keys enabling electronic signature and authentication methods. “Cards were born from cardboard, they’ve been ‘mag-striped’ and ‘chipped,’ and now we enter their silicon age, with an LCD display and touchpad opening up a multitude of possibilities,” says Eric Tomlinson, with MasterCard Europe, which will issue the cards. But don’t expect these next-generation credit cards to be widespread soon. The costs for producing smart cards are much higher than the simple magnetic stripe cards -- as much as $10 per card. The cards will be more widely adopted in Canada and Europe first, where customers are used to chip-infused cards.