1. The method of operating a personal verification system including encoding means and code word input means coupled to the encoding means for verifying the authority of an individual to complete transactions on the basis of the combination of an individual code word which is peculiar to the individual, a secret code word which need only be known to the individual and a compiled code word which is derived from the other of the code words, the method comprising the steps, performed in selected sequence, of: preparing a logical encoding status in accordance with a selected logical combination of both the individual code word and a secret code word received from the individual prior to verification of his authority to complete a transaction; encoding the combination of both the individual code word and the secret code word received from the individual in accordance with said logical encoding status to produce a compiled code word therefrom; preparing a record of said compiled code word for subsequent use in verifying the authority of the individual to complete a transaction; applying to the code word input means of the system both an individual code word for identifying the individual attempting to complete a transaction and a secret code word from such individual; preparing a logical encoding status in the encoding means of the system in accordance with said logical combination of both the individual code word and secret code word applied to the code word input means of the system; encoding the combination of both the individual code word and the secret code word applied to the code word input means in accordance with said logical encoding status prepared in the encoding means of the system to produce a corresponding compiled code word therefrom; comparing said corresponding compiled code word with the compiled code word from said record for the authorized individual having such individual code word; and controlling completion of the transaction in response to the comparison of the compiled code word from said record with said corresponding compiled code word produced from the applied individual code word and secret code word received from the individual attempting to complete the transaction.
3. The method according to claim 1 wherein said step of preparing the record includes supplying the compiled code word to the authorized individual; and including the step of: applying such individual's compiled code word to the code word input means in the course of attempting to complete a transaction; and said step of controlling completion of the transaction is performed in response to the comparison of the compiled code word introduced from the record of such individual with said corresponding compiled code word produced by the encoding means from the secret code word and individual code word received from the individual.