Title: Moving Fast: Competition Heats Up on Credit Card Security
Abstract: As everyone knows, the recent downturn in the dot-com world has hit the stock market, especially the NASDAQ, hard lately. Does that mean a corresponding slowdown in credit card purchases over the Internet? Hardly, if you can believe the analysts. According to one report, online use of credit cards is growing at over 50% a year in the United States and Internet spending will top $25 billion in 2001. Yet Internet credit card use has a long way to go, and while consumers increasingly want to shop online, many are reluctant to provide credit card details on the Internet, scared stiff that someone will obtain the information and use it to make fraudulent purchases. One company that has worked hand in hand with the banking industry for over 88 years is NewGround Resources. President/CEO Kevin Blair notes, see virtually of all of our client banks working diligently to address security issues. We work closely with our customers to help them stay current on not only credit card and Internet Home Banking security advances, but across-the-board security trends including such issues as physical security and employee training. American Express is one company that is taking steps to allay consumer fears of Internet-based credit card fraud by rolling out one-time-use credit card numbers. These disposable credit card numbers are linked to their physical American Express cards--simply download Private Payments software or visit American Express online, enter your username and password, and you'll get your new randomly generated number. This is a good first step, but Amex's solution is not practical for everything. Fortunately, one-time--or surrogate--credit card numbers appear to have more potential than this first-generation deployment of Private Payments. One major advantage to surrogate number technology is that it doesn't require merchants or consumers to add any hardware. The randomly generated numbers mimic the consumer's actual account number, making them virtually indiscernible to the merchant. Furthermore, surrogate numbers should add less than 400 milliseconds to the authorization process, still keeping most processing times around five seconds--great news since no one wants transactions to become slower or more expensive. American Express's Private Payments doesn't require special hardware or transaction costs either, so why not use Amex's system? One good reason is that Private Payments doesn't work for one-click purchases using stored credit card numbers and shipping information. It's also impractical for replenishing groceries or office supplies delivered at preset intervals. Another situation in which it is useless is when Internet service providers (ISPs) ask to store customer credit card information for automatic monthly billing purposes. Advanced forms of the technology will allow consumers to set up merchant accounts and control the length and amount of authorization, which basically creates a set of spending rules designed to prevent fraudulent use. Other features may include integrated e-wallet capabilities, graphical elements such as a visual of the issuer-branded card, and the ability to code authorization for purchase categories (food, office supplies, etc.). The success of surrogate number technology is also somewhat linked to the obstacles facing cards. Surrogate number technology and smart cards both offer solutions to the online fraud concerns of consumers. However, some analysts believe that surrogate numbers will have a faster adoption rate than smart cards simply because merchants are already equipped to handle them so resistance should be basically nonexistent. Consumers want a solution to fraud, and many aren't easily appeased by zero liability promises. Surrogate number technology realistically addresses the problem of online fraud and should help provide the means to easily and painlessly help the public do its part in fighting credit card abuse and fraud. …
Publication Year: 2001
Publication Date: 2001-04-01
Language: en
Type: article
Access and Citation
Cited By Count: 2
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