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BizReport : Ecommerce archives : February 14, 2007

British banks trial online credit card fraud prevention device

There could be good news ahead for British online shoppers. U.K. banks are piloting a scheme to issue customers with personal credit card readers.

by Helen Leggatt

Remote, or "card not present", are transactions that take place online and over the telephone. APACS, the U.K. payments association, forecast that 2006 will see a decrease in the cost of overall credit card fraud, and this is reflected in the 5 percent drop during the first six months of 2006. Full year figures are due out next month.

Despite this, "card not present" fraud increased by 5 percent in the same six month period and online banking fraud rose 55 percent.

The handheld device that APACS will trial, generates a unique transaction verification code after the user has inserted their card and pin. The code is communicated to the retailer, who then uses it to verify the transaction. The process minimizes the need to reveal account and card information, with the retailer requiring just the code and delivery information.

"These developments are still in initial trials and it will be interesting to see who will be the first to come on board," said Robert Kenley, head of credit cards at price comparison service "If it comes to fruition, this innovation will not only protect consumers, but also revolutionise the payment card market."

Tags: credit cards, e-commerce, fraud, online transactions, security, UK

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  • Francis A Avotchi

    I lost my driving licence a few months ago. Ofcourse, I reported to the police. I have since been issued with a new one and above all I have moved to a new address from SE15 to SE17 2BJ

    My concern is the possibility of impersonification and falsification of my details by someone to open an account or probably obtaining credits cards in my name.

    I am seeking to be able to alert all major banks and credit card companies to be vigilant of any one posing as me.

    I now live at post code indicated above.And my date of birth is 07/07/1961.

    Thanks for your co-operation


  • It seems that ID and credit frauds are always a step ahead of all the new protection devices being developed. But i think if all the major credit card companies merge in introducing the unique verification code and spread it all over the country, then maybe it'll have its effect.

  • Reasons why Chip and PIN system is making bad problems worse.

    1. These reports show that this system is threatening public safety where criminals force victims to hand over their cards and PIN numbers Gang's victims 'scarred for life' , Mum stabbed after handing over bank cards

    2. This system has not stopped banks from relying on signatures to conclude other transactions and that is why identity fraud is booming.

    3. This system has given fraudsters option to skim and pick PIN numbers even from retail outlets rather than only from ATMs. This is probably why ATM fraud is booming.

    4. This system has enabled cardholders to let others use their cards on their behalf. This is why banks are not sure if crimes are faked.

    Looking at these details it is obvious that Chip and PIN system will provide dishonest and not the honest traders additional income.

    Biometric systems will work in small organisations where everyone concerned would be on database and every point of transaction will have reading equipment. Since we cannot satisfy both these conditions nationally, these systems will only make problems worse by diverting fraud crimes.

    I hope policymakers will look at these details seriously.

    Soon ID KEY system described on website will make virtually all fraud crimes a thing of past simply by making signature and PIN numbers at ATMs reliable.



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