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Digital card

A digital card is a card that uses for , processing, or transmission, encompassing both physical forms like smart cards with embedded chips or magnetic stripes and virtual representations for use. Virtual digital cards, also known as virtual cards, are non-physical counterparts to traditional , debit, or prepaid cards, allowing users to conduct secure transactions online, via mobile apps, or through digital wallets without a tangible . These cards typically generate unique, temporary account numbers, expiration dates, and codes linked to a user's primary source, enhancing and reducing exposure of sensitive financial data during purchases. Physical digital cards, such as cards, originated in the 1970s, while virtual digital cards emerged in the late 1990s as a response to risks in early , with widespread adoption accelerating in the alongside smartphones and contactless systems. Primarily utilized in (B2B) and consumer transactions for payments, , and , digital cards offer advantages including heightened security, streamlined reconciliation via automated tracking, and cost efficiencies. In business contexts, they facilitate spend controls like transaction limits or merchant restrictions, , and improved . In contemporary , the term predominantly refers to virtual payment solutions integrated with platforms from issuers like and . As of 2025, their usage continues to expand, driven by regulatory support for secure digital economies and tokenization standards that replace card numbers with encrypted .

Overview and Types

Definition and Purpose

A digital card refers to either a physical or virtual medium designed to store and transmit digital data for functions including , processing, and . Physical digital cards, such as smart cards or chip cards, incorporate embedded integrated circuits to hold secure data like user credentials or transaction details, while virtual digital cards exist solely in electronic form, often as tokenized representations linked to financial accounts. Examples encompass credit and debit cards for payments, government-issued identification cards for verification, and mobile wallet entries that replicate card functionalities on smartphones. The primary purposes of cards center on enabling secure identity verification to confirm legitimacy, facilitating efficient for financial exchanges, and supporting to allow seamless transfer of information across systems or devices. In scenarios, digital cards validate identities through cryptographic challenges, reducing unauthorized access risks. For , they generate dynamic codes to authorize transfers while minimizing exposure. ensures that card-stored information, such as payment credentials, can be accessed or migrated without physical constraints, enhancing convenience in ecosystems. Key components of digital cards include mechanisms, such as magnetic stripes for basic encoding, for advanced secure , or cloud-based repositories for variants; reader interfaces like swipe devices for magnetic or NFC-enabled terminals for contactless interactions; and foundational protocols, including algorithms like or , to protect and enable between card and reader. The magnetic stripe serves as an early storage method by encoding static on a card's surface for quick reading. NFC facilitates contactless reading by allowing short-range communication, typically under 10 cm, to exchange securely without physical insertion. These elements collectively ensure reliable and protected handling. This technology represents an evolution from analog card systems, which relied on manual or verification, to digital formats that boost through automated and enhance via encrypted, dynamic data exchanges.

Physical vs. Virtual Cards

Physical digital cards are tangible objects, usually constructed from durable plastic, that incorporate embedded digital components such as magnetic stripes or microchips to enable data storage and transaction . These cards, like chip cards, feature an that securely generates dynamic authentication codes for each transaction, reducing fraud risks in contact-based payments. Virtual digital cards, by contrast, exist solely in digital form as software replicas of physical cards or standalone tokens, typically stored in mobile apps or cloud platforms for seamless access. For instance, provisions virtual card representations using tokenized account numbers derived from physical cards, or generates ephemeral digital-only numbers for enhanced in online and contactless transactions. These virtual formats allow for immediate issuance and use without physical production, often via from . Key differences between physical and virtual cards lie in their durability, convenience, and issuance processes. Physical cards are susceptible to wear, damage, or loss, potentially requiring replacement after prolonged use or mishandling, whereas virtual cards eliminate these risks by residing on secure devices, though they depend on the user's or accessibility. Virtual cards offer superior convenience for and mobile payments, always available without carrying a , while physical cards remain essential for scenarios lacking , such as certain in-person or offline transactions. Regarding generation, physical cards are produced and issued by authorized entities like banks through and mailing, often taking days or weeks, in contrast to virtual cards, which can be created instantly through app-based approvals or programmatic APIs. Hybrid models bridge these forms by starting with digital issuance and offering optional physical provisioning. For example, fintech providers like enable users to activate a debit card immediately upon account setup and later request a physical version for , combining instant digital access with tangible backup. This approach enhances , as virtual cards can often be tokenized for use in digital wallets alongside physical counterparts in payment ecosystems. Adoption of cards has surged, with transaction values projected to reach $5.2 trillion globally in 2025, reflecting their growing role in payments. In regions like , over 88% of consumers rely on mobile-based virtual payments for daily transactions, underscoring rapid in high-digital economies.

Historical Development

Origins of Physical Digital Cards

Early precursors to automated data cards appeared in the 19th century with punched cards, which served as a mechanical mechanism for . In 1890, American inventor introduced punched cards for the U.S. Census Bureau, using rectangular holes punched into stiff paper stock to represent demographic data, which could then be sorted and tabulated by electromechanical machines. This innovation dramatically accelerated data handling, reducing the census processing time from years to months, and laid foundational concepts for automated information storage that influenced later digital card technologies. The origins of physical digital cards occurred in the early with the invention of the magnetic stripe by engineer Forrest Parry. In , Parry developed the technology under a U.S. government contract to produce secure identification badges for CIA officials, embedding magnetizable tape onto plastic cards to store encoded data readable by machines. A key breakthrough came when Parry's wife suggested applying heat from an iron—similar to iron-on fabric patches—to fuse the tape to the card surface, resolving adhesion difficulties with earlier gluing methods. Initially limited to government applications due to high production costs of about $2 per card, the design was soon adapted for broader use. By the late 1960s and into the , magnetic stripe cards saw early commercial adoption beyond government sectors. In 1970, partnered with and to deploy the first ticketing system using these cards at Chicago's , allowing passengers to encode and retrieve travel data without manual intervention. This pilot demonstrated the technology's potential for rapid, error-free transactions. Concurrently, hotels began implementing magnetic stripe key cards in the as a secure, reusable alternative to traditional metal keys, enabling electronic door locks that could be easily reprogrammed or deactivated. Employee badges in corporate and banking environments also adopted the format by 1973, using stripes for and time tracking in facilities. A pivotal milestone arrived with in the 1970s, facilitating financial sector integration. The magnetic stripe format was formalized as a U.S. standard in 1969 under the leadership of IBM's Jerome Svigals and became an international ISO standard in 1971, defining track layouts and encoding for . This enabled banks to issue credit and debit cards en masse, transforming payment processing from manual imprints to automated readers and spurring global adoption. However, early implementations faced material-related hurdles; low-coercivity magnetic oxides used in initial stripes were susceptible to demagnetization from everyday , leading to frequent errors and requiring careful handling or redesigns with higher-coercivity alternatives.

Evolution to Virtual Representations

Virtual payment cards, as non-physical instruments for secure transactions, originated in the late , pioneered by companies like Orbiscom, which developed technology for generating temporary card numbers to combat fraud. Early adopters included banks such as , AIB, and . The transition from physical to cards gained further momentum in the and with the introduction of smart chip technologies, which enhanced card functionality and security, laying the groundwork for fully digitized representations. The standard, developed by a of Europay, , and , was first specified in 1994 to standardize chip-based payment cards, replacing magnetic stripes with integrated circuits capable of dynamic authentication and . This shift enabled cards to process more complex transactions securely, facilitating the eventual of physical cards on digital devices without requiring hardware possession. A key milestone in virtual card adoption occurred in 2011 with the launch of , the first major platform to enable users to store and use digital versions of payment cards on NFC-enabled smartphones for in-store and online transactions. Building on this foundation, the 2010s saw rapid growth in virtual card ecosystems, exemplified by Apple Pay's introduction in 2014, which integrated to allow secure tokenization and of physical credit cards via devices. Similarly, , launched in 2015, expanded virtual by combining with magnetic secure transmission (MST) technology to mimic card swipes on legacy terminals, broadening compatibility for digital payments. The 2020s accelerated this evolution, particularly through the , which drove demand for contactless virtual identification to minimize physical interactions. In 2021, initiatives like the WHO's Digital Documentation of COVID-19 Certificates enabled the issuance of verifiable digital vaccination records, often stored as virtual cards in mobile wallets, to facilitate travel and access verification. This period highlighted virtual cards' role in and beyond, with platforms evolving to support broader digital IDs. Sustained market drivers include the explosive growth in penetration, reaching approximately 5.8 billion users globally as of 2025, which provides the ubiquitous hardware for virtual card storage and use. Regulatory advancements, such as the EU's 2.0 regulation entering into force in 2024, further propel adoption by mandating interoperable frameworks across member states, standardizing virtual credentials for secure cross-border applications.

Core Technologies

Tokenization and Secure Encoding

Tokenization serves as a foundational technology for digital cards, replacing sensitive payment data such as the primary account number () with a unique, non-sensitive digital identifier called a . This process enhances by ensuring that actual card details are not exposed during transactions, reducing risks in and payments. Tokens are generated using cryptographic algorithms and stored in secure servers or secure elements, with mapping back to the original handled only by authorized token service providers (TSPs). The tokenization framework follows the EMVCo Tokenisation Specification, introduced in 2014 and updated through versions like as of 2023, which defines domain-specific for systems, for , and for . For digital cards, a typical is a 16-digit surrogate , expiration date, and , encoded in formats compatible with existing networks. Data encoding uses secure hashing and standards, such as AES-256, to protect requests and responses via . The process involves a requestor (e.g., app) sending encrypted data to a TSP, which provisions the if authenticated, often using protocols for added verification. For example, in a virtual card issuance, the format might include a ID, usage limits, and a dynamic generated per transaction. Provisioning and de-provisioning follow structured calls, with error handling via status codes similar to HTTP responses. Token lifecycle management includes suspension or deletion for compromised cards, ensuring limited exposure. As of 2025, tokenization adoption exceeds 50% of digital transactions globally, driven by PCI DSS compliance requirements that mandate protection of cardholder data. Limitations include dependency on network connectivity for tokenization and potential in high-volume scenarios, though mitigates this.

Secure Provisioning and Contactless Features

Secure provisioning is the process of issuing and activating cards in devices or applications, enabling immediate use without physical . This typically occurs through push provisioning APIs, where issuers send encrypted card credentials directly to digital wallets like or , bypassing manual entry. The Token Service and Digital Enablement Service provide standardized APIs for this, supporting formats like over with mutual TLS authentication. Provisioned cards include controls such as spend limits, merchant locks, and single-use flags, managed via backend platforms. Contactless features for digital cards leverage (NFC) protocols under ISO/IEC 14443, operating at 13.56 MHz for tap-to-pay interactions up to 4 cm. Security is achieved through either embedded (SE)—dedicated tamper-resistant chips in devices storing keys and performing cryptographic operations—or host card emulation (HCE), a software-based approach where the device's emulates a using cloud-derived keys. SE offers higher isolation with hardware boundaries (e.g., in iOS Secure Enclave), supporting offline cryptogram generation per EMV standards, while HCE (common in ) relies on secure server communication for dynamic data, reducing device storage needs but requiring online access. Both use application protocol data units (APDUs) for reader-card exchanges, with encryption via and session keys to prevent . Advancements as of 2025 include hybrid models combining and HCE for broader compatibility, and integration with biometric authentication (e.g., ) for provisioning. Dual-mode support allows seamless switching between online and offline modes, with transaction limits (e.g., $100 without PIN) per regulatory standards like PSD2 in . Vulnerabilities such as relay attacks are mitigated by distance bounding and device binding, ensuring robust protection in virtual card ecosystems.

Applications and Usage

Financial and Payment Systems

Digital cards are integral to modern financial and payment systems, facilitating secure and efficient monetary transactions through embedded technologies that authenticate users and process payments. The standard, a chip-based protocol jointly developed by Europay, , and , represents a cornerstone of this ecosystem by replacing vulnerable magnetic stripe data with dynamic cryptographic elements that generate unique transaction codes. This innovation has substantially reduced counterfeit fraud; according to Visa, fraud at EMV-compliant merchants in the United States decreased by 76% within four years of widespread adoption starting in the mid-2010s. Advancements in digital cards have extended to virtual payment tokens, which enhance security by substituting the primary account number () with device-specific or one-time-use identifiers, thereby limiting exposure of sensitive data during transactions. For instance, tokenization in services like replaces the card's with a unique Device Primary Account Number (DPAN) specific to the device, along with a dynamic generated for each transaction, ensuring that even if intercepted, the holds no value outside the authorized ecosystem. This approach, standardized under EMV Payment Tokenisation specifications, supports seamless integration with () for contactless payments while minimizing fraud risks associated with data breaches. Major payment networks such as , , and underpin the global infrastructure for digital card transactions, handling authorization—where merchants request approval from issuers—and clearing, where funds are settled between parties. These processes rely on messaging, an international standard that structures data elements like transaction amounts, card details, and response codes for interoperable communication across systems. By 2025, global digital payment volumes are projected to reach approximately $10 trillion, with around 70% of transactions conducted contactlessly, reflecting widespread adoption driven by convenience and security enhancements. Regional variations in digital card usage highlight differing authentication practices shaped by historical and regulatory contexts; for example, has long emphasized chip-and-PIN verification for added security since the 1990s, while the predominantly relied on chip-and-signature methods before the 2020s, leading to slower initial shifts toward PIN-based systems. These differences influenced fraud patterns and adoption rates, with European markets achieving higher contactless penetration earlier due to standardized PIN protocols.

Identification and Access Control

Digital cards play a crucial role in by embedding machine-readable data that verifies an individual's for official purposes. In the United States, driver's licenses compliant with the REAL ID Act incorporate a , a two-dimensional symbology standard that encodes essential personal information such as name, date of birth, and license number, enabling quick scanning by authorities for verification. This , located on the back of the card, adheres to ISO/IEC 15438 specifications for durability and error correction, ensuring reliable machine readability during checks at airports or government facilities. Passports utilize electronic Machine Readable Travel Documents (eMRTDs), which feature a contactless integrated circuit chip compliant with ICAO Doc 9303 standards, storing biographical data and biometric information for enhanced identity assurance during international travel. The chip supports ISO/IEC 14443 for contactless communication, allowing border officials to authenticate the holder's identity against the document's data. For , digital cards facilitate secure entry to restricted areas without financial transactions. Hotel key cards commonly employ chips from , which operate at 13.56 MHz and use cryptographic authentication protocols to unlock doors, providing a convenient yet secure method for guest access to rooms and amenities. Similarly, transit cards like London's integrate RFID technology to enable contactless tapping at gates, verifying the user's eligibility for travel on public transport systems managed by . Digital equivalents of these cards are advancing identity verification through mobile platforms. By 2025, over 18 U.S. states, including , , and , offer mobile driver's licenses (mDLs) via apps integrated with digital wallets like , allowing users to present credentials on smartphones for identity checks at TSA checkpoints. In the European Union, the (EUDI) Wallet, mandated by Regulation (EU) 2024/1183, enables citizens to store and share digital proofs of , such as driving licenses, across member states for seamless access to services while maintaining user control over data. Verification processes for these digital cards often incorporate biometric integration to prevent . Passport chips store a mandatory digital facial image and, in many cases like EU-issued documents, two flat fingerprints, which can be matched against live scans during to confirm the holder's identity. For mobile versions, two-factor typically combines device-bound , such as facial recognition or fingerprints, with a PIN or generated via the app, ensuring secure release of data during verification without exposing full credentials. Adoption of digital cards in transit access control is growing rapidly, with the global smart ticketing market projected to expand at a 14.3% CAGR from 2025 onward, driven by contactless and mobile solutions that enhance efficiency in urban public transport systems.

Security Considerations

Built-in Protections

Digital cards incorporate several inherent security mechanisms to safeguard sensitive data against unauthorized access and tampering. These protections are embedded at the hardware, software, and protocol levels, ensuring that transactions and data exchanges remain confidential and authentic. Primary among these are cryptographic techniques that form the foundation of secure operations in payment and identification systems. Encryption algorithms play a central role in protecting digital card data, utilizing (PKI) frameworks with digital certificates such as standards to enable secure key exchange and verification. In EMV-compliant systems, protocols require both the card and the terminal to verify each other's identity using these certificates, preventing man-in-the-middle attacks during transactions. This process involves the card generating a dynamic signed with the issuer's private key, which the terminal validates against the corresponding public key embedded in the certificate. To enhance tamper resistance, digital cards often employ secure elements (SE), which are dedicated tamper-resistant hardware components designed to store cryptographic keys and perform secure computations isolated from the main processor. Embedded Secure Elements (eSE), commonly integrated into mobile devices for digital card emulation, incorporate hardware firewalls and physical protections like side-channel attack countermeasures to detect and respond to probing attempts. These elements ensure that even if the device is compromised, sensitive card data remains inaccessible without proper authorization. Tokenization further bolsters by replacing primary account numbers (PANs) and other sensitive with unique, non-sensitive surrogates or that hold no intrinsic value outside the issuing system's controlled environment. In payment contexts, this allows merchants to process transactions using without ever handling actual details, with detokenization—reversing to retrieve original —restricted to the issuer or authorized token service providers. and implementations, for instance, generate device-specific bound to the user's mobile wallet, reducing the scope of potential breaches. Compliance-oriented features address card-not-present scenarios prevalent in virtual digital cards, including the use of CVV2 codes, which are printed on the card's signature panel (not encoded on the magnetic stripe or chip) and verified during online transactions to confirm card possession. Dynamic CVV generation advances this by producing time-limited or transaction-specific codes via issuer APIs, such as Visa's dCVV2 service, which allows cardholders to request fresh codes for without exposing static values. As of March 2025, DSS 4.0 mandates stricter controls, including targeted risk analyses and support for emerging technologies, to bolster in virtual card ecosystems. The evolution of these protections has progressed from reliance on static PINs, which were vulnerable to shoulder-surfing and replay attacks, toward integrated behavioral by 2025. Modern digital cards now leverage continuous through , , and swipe patterns captured via device sensors, providing adaptive verification that evolves with user behavior without requiring explicit input. This shift enhances usability while maintaining high security, as seen in EMV-integrated mobile wallets that combine with tokenization for seamless, fraud-resistant access.

Vulnerabilities and Exploits

Digital cards, particularly those relying on magnetic stripes, are susceptible to skimming attacks where unauthorized readers capture during swipes at ATMs or point-of-sale terminals, enabling criminals to clone the stripe onto blank cards for fraudulent use. This vulnerability persists because magnetic stripes store static without dynamic authentication, allowing easy duplication even after the widespread adoption of chip technology. Contactless digital cards using () face attacks, in which attackers deploy proxy devices to intercept and forward signals between a legitimate and a reader, effectively extending the range far beyond the intended few centimeters—potentially to tens of meters or more using paired smartphones or specialized . These attacks exploit the low-power, short-range design of without requiring physical possession of the , as demonstrated in practical scenarios where on NFC-enabled mobiles relays data in . Built-in provides only partial mitigation, as techniques can bypass proximity checks before cryptographic validation occurs. Integrated circuit chips in digital cards are targeted by side-channel attacks, such as , where attackers monitor fluctuations in the card's power consumption during cryptographic operations to infer and leak secret keys without direct access to the chip's internals. attacks further compromise these chips by deliberately introducing errors—via lasers, voltage glitches, or electromagnetic pulses—to disrupt computations and force the revelation of sensitive data or bypass authentication mechanisms. These physical exploitation methods require specialized equipment but are feasible with physical access to the card, highlighting inherent hardware limitations in secure enclaves. Virtual representations of digital cards in mobile apps introduce risks like man-in-the-middle (MITM) attacks during token provisioning, where intermediaries intercept communications between the app and payment servers to steal or alter session data before secure tokens are issued. Phishing schemes exacerbate this by tricking users into approving fraudulent token requests through fake notifications or websites mimicking legitimate providers, leading to unauthorized access to virtual card credentials. In 2024, the U.S. documented over 449,000 consumer reports of information misuse, underscoring the scale of annual compromises affecting millions globally when including unreported incidents and international data. Real-world exploits, such as the DEF CON 24 demonstration of hacking magnetic-stripe-based hotel key cards to generate unauthorized access duplicates, illustrate how legacy formats enable widespread in systems. Despite ongoing chip transitions, mitigation gaps remain due to persistent legacy magnetic stripe support as a fallback on many cards and terminals, allowing attackers to exploit swipe-based even post-phase-out deadlines set for the late 2020s. This sustains vulnerabilities, as evidenced by continued skimming incidents targeting stripe data in hybrid environments.

Standards and Future Trends

Key Standards and Regulations

The (ISO) and the (IEC) have established foundational standards for digital cards through the ISO/IEC 7816 series, which specifies requirements for cards with contacts, including physical characteristics, electrical interfaces, and commands for interchange in identification applications. This series ensures compatibility and security for contact-based smart cards used in various global systems. Complementing this, the ISO/IEC 14443 series defines protocols for contactless proximity cards, covering physical characteristics, power, initialization, and transmission protocols to enable short-range communication at 13.56 MHz. For magnetic stripe technologies, the ISO/IEC 7811 series outlines recording techniques, including dimensions, levels (low and high), and encoding formats to standardize data storage on identification cards. EMVCo, a global technical body, maintains specifications for chip-based payment cards and acceptance devices, with certification divided into three levels: Level 1 for physical and electrical interface testing, Level 2 for protocol and application compliance, and Level 3 for terminal with backend systems to ensure secure . These levels facilitate global for EMV-compliant cards, reducing in payment ecosystems. An example of ongoing evolution is the 2023 update to EMV Integrated Circuit Card Specifications version 4.3, which incorporated new bulletins into subsequent versions like 4.4 to address security enhancements and . Regionally, the Payment Card Industry Data Security Standard (PCI DSS), developed by the PCI Security Standards Council, mandates requirements for organizations handling cardholder data, including network security, access controls, and regular testing to protect against breaches in payment card environments. In the , the General Data Protection Regulation (GDPR) imposes strict rules on processing personal data in digital cards, requiring consent, data minimization, and breach notifications to safeguard user privacy. Building on this, the 2.0 framework under the EU Digital Identity Regulation requires member states to provide at least one EU Digital Identity Wallet to citizens and residents by 2026, enabling secure and trust services for cross-border digital interactions. International bodies further shape governance, with the (ICAO) defining standards in Doc 9303 for electronic passports (ePassports), specifying machine-readable zones, biometric data storage, and to enhance and document integrity. The promotes authentication standards using for phishing-resistant methods, such as passkeys, which integrate with digital cards to enable stronger, passwordless verification across devices and services. Compliance processes involve rigorous certification timelines managed by these bodies; for instance, approvals require sequential Level 1-3 testing, often spanning months, with updates like the 2023 EMV 4.3 revisions ensuring devices meet evolving security protocols before market deployment. Non-compliance can result in restricted market access, as seen in PCI DSS validations that demand annual assessments.

Emerging Developments and Phase-Outs

The phase-out of magnetic stripe technology on payment cards continues to accelerate, driven by the widespread adoption of chip and contactless standards. began removing magnetic stripes from new cards issued in starting in 2024, where chip penetration is already over 90%, and will no longer require them on U.S. cards starting in 2027, with full elimination across all cards by 2033. , while not announcing a fixed timeline, is aligning with industry shifts toward chip-only cards to enhance and reduce , supporting the broader transition away from legacy swipe-based systems. Advancements in digital card technology are incorporating for decentralized , enabling self-sovereign identities (SSI) that allow users to control their data without intermediaries. These blockchain-based solutions leverage Decentralized Identifiers (DIDs), a W3C standard that supports on distributed ledgers, facilitating secure digital cards for applications like loyalty programs and . Additionally, quantum-resistant encryption is being integrated into protocols to future-proof against emerging threats from ; for instance, (PQC) algorithms like those standardized by NIST are now embedded in chips to protect asymmetric keys used in . Digital ID initiatives are expanding rapidly, with mobile driver's licenses (mDLs) leading the way in verifiable digital credentials. In the United States, adoption has surged, with at least 18 states offering mDLs as of 2025, including major population centers like and , enabling residents to store and present licenses via apps for identity . Globally, the ISO/IEC 18013-5 governs mDL interoperability, specifying secure data exchange between mobile devices and readers, while the newer ISO/IEC TS 18013-7 extends this to internet-based presentations for remote . Sustainability efforts are prompting a shift from physical plastic cards to virtual alternatives, addressing the environmental burden of traditional issuance. Prior to widespread virtualization, the global payment card industry had approximately 26 billion plastic cards in circulation as of the end of 2022—contributing significantly to plastic waste that can take centuries to decompose. Virtual cards, provisioned digitally via apps, eliminate this plastic footprint, with issuers like promoting them to cut emissions and support goals. Looking ahead, experts predict cards will achieve dominance by 2030, with the projected to reach $14.32 in value, driven by growth and B2B automation. Integration with () and () is emerging as a key innovation, enabling immersive verification experiences such as holographic ID presentations in environments or overlays for real-time authentication in settings.