The rollout begins
Ondot won't offer CardControl to the public. It will sell the app to financial institutions, card issuers and processors who can offer it as an added feature to their cardholders.
What's in it for the banks? They hope it will cut their fraud losses and get people to use their cards when they reach in their wallet.
The company says it has partnered with four of the seven major credit card processors, which handle transactions for 10,000 banks and credit unions across the country. The only partner named so far is CO-OP Financial Services, a card processor for credit unions.
BECU, the fourth-largest credit union in the country, headquartered in Tukwila, Washington, will begin testing CardControl this summer with debit card customers.
"People know how they use their card and how they want it to be managed," said Tom Tyson, BECU's digital channel manager. "This gives them a way to take action without contacting us."
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Tyson said the company has heard from members who don't use their debit card because they are worried about the risk of fraud.
"This can return the convenience of the debit card and give them a sense of confidence that wasn't there before," he said. "It's such a simple solution to such a big problem that we can easily put in everyone's hands."
Lone Star National Bank in southern Texas has offered the original version of CardControl—an app with a simple on/off switch—to its debit card customers for about a year now. Kevin Pilgrim, chief information officer, said customers have been quick to adopt it, which has been good for the bank.
"It not only lowered our cost of mitigating fraud, but our customers now feel more empowered, so they use their debit cards more," Pilgrim said.
During that period, fraud losses dropped 60 percent and debit card usage increased by 54 percent. That's good for the bank, since it makes a little money through a processing fee every time the card is used.
The start of a something new
Mobile devices are rapidly becoming remote controls for various aspects of our lives, so why not leverage this mobility to control our payment cards? It seems like a natural fit.
But are there downsides? What if your cards are locked and you lose your smartphone or the battery dies or you're in an area with no cell reception?
"These are the early days and there needs to be a lot of testing," said Pradeep Moudgal, an analyst with the Mercator Advisory Group. "People have to get comfortable with this technology and use it, but eventually systems like this will provide greater flexibility for consumers and help them manage the cards in their wallet in a better way."
—By CNBC contributor Herb Weisbaum. Follow him on Facebook and Twitter
@TheConsumerman or visit The ConsumerMan website.