[stonemetal]

The physically possesses part is an important part of that equation. If I hack the users computer and steal the swipe info then I can retransmit the data and home swipe without physical possession of the card. Since the user never lost the card he is less likely to report it lost or stolen in a timely manner. A smart credit card would generate a known nonce making retransmited data worthless, and restore the likely physically has the card factor.