The new cards have been developed by Pittsburgh-based start-up Dynamics Inc., which officially launched the technology in September after operating in stealth mode for a number of years.

The size and shape of a standard credit card, the new cards - dubbed Card 2.0 by Dynamics and 2G by Citi - feature programmable and electronic components, including a battery, an embedded chip, two buttons, and a card-programmable magnetic stripe.

The product has been in trials with a small number of Citi credit card customers since May 2010. During the forthcoming full-scale pilot, cardholders will have the option to pay by 'regular credit', or press a "request rewards' button which allows them to redeem points or cash rewards with a simple swipe of the card. When the cardholder presses one of the buttons, the card is activated, and the corresponding light will turn on to confirm the option selected.

Terry O'Neil, EVP of Citi's North America Credit Card division, says: "With Citi's latest feature, customers now get a credit card that better fits their lifestyle and needs, putting more options right in their hands."

The 2G credit cards will be available to select Citi cardholders in a November 2010 pilot program. Citi will gather customer feedback with plans to offer the cards on a larger scale in 2011.

Finextra verdict Dynamics has been wowing potential investors and corporate users at start-up events across the US. Alongside the redemption card, the company has also produced a version which hides the card number until its unlocked with the entry of a personal PIN. It's smart technology, but we can't help but wonder why any US bank would want to invest in a stop-gap mag-stripe-based product when the rest of the world is moving in the direction of advanced chip-based card and mobile payments technologies.