A local entrepreneur, with an assist from a modern-day tech legend, is working to put his own stamp on credit card payments.

Doug Yeager, founder of the former Tradewind Technologies, is aiming for a piece of the growing “contactless” credit card market with his new company, Elemental Knowledge.

A contactless credit card features a microchip that interacts with a special reader. The consumer waves the card in front of the reader, which registers the transaction. Merchants like Regal Cinemas and McDonald’s offer contactless payments.

Yeager’s challenge was to use that technology for Internet transactions. The solution: integrate a USB plug into the card.

When buying something on the Internet, the consumer simply plugs the card into the computer’s USB port. The same chip that interacts with the contactless reader automatically generates a unique account number for each Internet transaction.

Yeager is working on both a key fob — an oval device that clips on a keychain — and a more traditional credit card with a USB plug on one corner. The devices he is developing would work both at the point of sale and over the Internet.

“What we’re really trying to do here is combine the two so the customer only carries one thing,” said Yeager, a former state champion decathlete at Bearden High School.

Yeager has been operating on his own cash, though he expects to close an initial round of funding next month. That seed funding is about half of what Yeager needs, and he’s hoping to court other investors. (The company is online at www.elementalknowledge.com.)

Elemental Knowledge is a one-man show so far, but Yeager has an influential tech figure in his corner. Steve Wozniak, an Apple Corp. co-founder, is a company adviser.

Yeager said the two met while working on a project for another company. Yeager asked Wozniak to be a company adviser in June, and Wozniak accepted.

Yeager said that having the man known as “The Woz” on board gives him a savvy technologist to help work out technical questions. It also gives Elemental Knowledge the stamp of legitimacy with potential vendors.

“He’s just an influential person in the Bay Area, and that’s where a lot of these companies are,” Yeager said.

Yeager’s company also has a partnership with U.S. Encode, a San Diego-based authentication software company that has established relationships with banks and other card issuers.

With those pieces in place, Yeager is looking to “type approval,” a testing process needed to get the devices to market.

Yeager said the fob will probably be ready before the end of the year. The card has more manufacturing details to work through, and Yeager hopes it will be ready by the middle of next year.

In the interim, Yeager said he’ll likely add another employee once he closes on the seed funding. But the company will continue to run lean as its products make their way to market.

“This will be a pretty small operation for a while,” Yeager said.

(July 31, 2007) Spotting an opportunity in combining online authentication with contactless technology, a 6-month-old Knoxville, Tenn.-based company plans to have a product on the market by early next year that consumers could use to make payments both on e-commerce sites and at the point of sale. Elemental Knowledge LLC is starting with a contactless fob with a USB connector for use in online authentication, to be followed by a credit card form factor featuring a contactless chip-and-antenna inlay as well as a USB connector for use with PCs and at POS readers. The card, says Doug Yeager, founder of Elemental Knowledge, should begin shipping in early 2008.

By inserting the card into a USB port at checkout, consumers would be able to pay online merchants from the account stored on the card’s chip. Using so-called reader-on-card technology, the card requires no drivers and can interrogate the chip and generate a dynamic account number, or an account number some of whose numbers have been encrypted for one-time use. Issuing banks, Yeager says, will require no special software to interpret the incoming authorizations. At the same time, the mag-striped card will work with contactless transceivers at merchant counters and will swipe through about 90% of POS terminals, Yeager estimates.

Elemental Knowledge, which is currently funded by angel investors Yeager won’t name, plans to work with U.S. Encode, a San Diego company, to market its product to banks. U.S. Encode, which several years ago developed an authentication platform to support a payment card that would work in the CD drives of PCs (Digital Transactions News, March 2, 2006), has developed banking relationships in Australia and South Africa as well as the U.S and sees Yeager’s technology as compatible with its own strategy. The Elemental Knowledge product “increases the offering to financial institutions, and provides a transactional piece at the point of sale as well,” says Brian T. Murray, chief executive at U.S. Encode. “That’s the way we went with our optical card. We’ve built an authentication back-end into which this [Elemental Knowledge technology] will plug seamlessly.” The two companies are hammering out the details of their partnership, Yeager and Murray say.

Yeager, who holds a master’s degree in mechanical engineering, approaches the contactless payment business from the radio-frequency-identification side of the industry, having founded a company earlier that made RFID readers for supply-chain applications. He now hopes one product will leverage two critical trends: the spread of contactless technology for payment and online authentication for e-commerce and online banking. “I thought the authentication space could use contactless,” he says. “I wanted to take that added value [from contactless] and let people use it for Internet transactions, and also without shipping everyone readers.”

Currently in prototype, the card does present Yeager with one technical problem he’s still wrestling with: how to incorporate the USB connector, which fits on a corner of the card but is thicker than standard credit card stock. He sees two approaches--either clipping the connector on the corner of the card as a temporary add-on or affixing it permanently. He favors the latter approach and is working out the engineering details. “That will require study,” he says. Another factor is cost. Yeager estimates his card will cost about 75 cents more than ordinary contactless cards at low, pilot-size quantities, predicting this difference will shrink at high quantities. Elemental Knowledge also faces competition from companies like Pay By Touch and MagTek Inc., which are selling high-tech products to secure both online and brick-and-mortar transactions.

The technology’s key advantage, as Yeager sees it, is that it is an all-in-one device that doesn’t require consumers to load software or attach peripheral hardware and that also works at the physical point of sale. Historically, consumers have proven resistant to hooking up external readers or PIN pads to authenticate themselves for online payments. “I wanted to make this an added value rather than a hindrance,” Yeager says. “The idea was dead unless we could ship it as a single device.”

Add a USB interface directly to the plastic card, use the contactless chip to generate a one-time account number for each transaction, and pump it through USB to the PC. Voilà – a readerless OTP that doesn't require keying of data by the user. This and other innovations are underway at Elemental Knowlege, a new company started by former exec from SIRIT and TradeWind Technologies, Doug Yeager. The card is emulating keyboard output so no drivers are required and it can work across machines or operating systems.

Knoxville, TN - Elemental Knowledge LLC is proud to announce Steve Wozniak as an advisor. A Silicon Valley icon and philanthropist for the past three decades, Steve Wozniak, helped shape the computing industry with his design of Apple's first line of products the Apple I and II, and influenced the popular Macintosh. For his achievements at Apple Computer, Steve was awarded the National Medal of Technology by the President of the United States in 1985, the highest honor bestowed upon America's leading innovators. In 2000, Steve was inducted into the Inventors Hall of Fame and was awarded the prestigious Heinz Award for Technology, The Economy and Employment for single-handedly designing the first personal computer and for then redirecting his lifelong passion for mathematics and electronics toward lighting the fires of excitement for education in grade school students and their teachers. Steve holds Bachelor of Science degrees in Electrical Engineering and Computer Science from the University of California, Berkeley.

Knoxville, TN - Elemental Knowledge LLC announces the availability of Contactless USB. The primary use for the form factor is multi-factor authentication. By simply interfacing the contactless chip on the card through USB, the device is kept at a very low cost and is able to bring significant added value to internet banking and payment.

The device features keyboard wedge emulation to deliver encrypted card data to a web browser. This allows for driverless operation and a broad range of supported operating systems including Windows, MAC-OS, and Linux. A dynamic card number or PAN is generated with every use in order to prohibit duplicate transactions. The device enables true 2-factor authentication providing data that can only come from "something you have". "Reader On Card" (ROC) technology is employed so the interrogation of the secure element happens outside of the scope of the PC. The PC only sees the encrypted Track 1/2 equivalent data that the device sends to the PC after the interrogation.

The device is also intended for contactless payment use at any number of retail merchants including Regal Cinemas, CVS drugstores, Seven Eleven, and McDonalds.

The device is available and tested. It is intended to be customized per card issuer's request. Elemental Knowledge is currently seeking card issuers to participate in trials or full role out to customers.