French banking alliance launches anti-fraud smartcard

French banking ecommerce association Cyber-Comm has unveiled its latest weapon in the battle against online fraud - a smartcard reader that attaches to a user's PC.

Cyber-Comm, which is comprised of the ten largest French banks, is proposing to use SET (secure electronic transaction) technology and the smartcard readers for all future ecommerce transactions.

Hervé Sitruck, director general of Cyber-Comm, said fraud was the biggest barrier facing the uptake of ecommerce in France, and claimed French banks receive 2,500 complaints each week about online transactions.

Under the terms of the proposal, consumers would purchase the smartcard reader for FF400 (£36) from distributors Activcard and Covadis.

A Cyber-Comm spokesman said: "Consumers will use the box to pay safely on the Internet. They will slot the carte bleu (bank card with embedded chip technology) into the machine, tap in the pin number and this will validate the transaction. This is the safest way to purchase goods over the Internet."

Over 200 retailers are expected to participate in the scheme by the end of the year. While 200,000 smartcard readers will be available from 18 April to all consumers.

David Birch, director at consultants Hyperium praised the scheme but added: "It is an excellent idea, merchants will have an incentive to use the cards as they get better returns from the buyers, it is convenient for consumers but it will not work if they charge for it. But why should consumers pay? They get card protection against fraud so they would end up paying to protect the banks from fraud and save them money. They should give them away as they do in the US."

Birch said American Express' Blue Card offers smartcard technology but the readers are given away for free.

Cyber-Comm conceded the charge was expensive, but said negotiations were underway to reduce the price.

One banking source - who wished to remain anonymous - said the scheme will not find its way across the Channel. "Egg cards already have chips in them but no-one can use them as the retailers have boycotted them and the high-street banks won't recognise them. If British banks ever launched the smartcard scheme they would spend their time wrangling over readers and charges like they do over ATMs," he said.