MasterCard claims end to card fraud

Credit card giant MasterCard has unveiled a technology which it claims will help banks, consumers and retailers protect themselves against card-not-present fraud.

The announcement comes at a time when internet security and the issue of consumer confidence in ecommerce is once again under scrutiny.

The SecureCode authentication system adds an extra layer of security which MasterCard effectively creates "a card present digital signature" according to Dr Toni Merschen, MasterCard senior VP.

David Taylor, technology consultant for Barclaycard, who is trialling the service, said: "We think many consumers aren't shopping on the internet because of the complexity and security plays a massive part in that complexity. We believe with this SecureCode service consumers will feel more confident transacting online."

The SecureCode system, which was unveiled at the Cartes 2003 Expo in Paris, works using a card reader which resembles a standard pocket calculator.

Consumers insert their credit card, enter their PIN and are provided with a six-digit code. By entering this use-once code into a retailer's website when prompted they are therefore confirming the presence of the card.

While consumers already enjoy a reasonable level of protection against fraud the service will be a real boon for merchants who currently foot the bill for card-not-present fraud.

The banks will also be keen to see the system adopted as that liability will switch onto them as of 1 January 2005.

Merschen admitted one of the benefits of the SecureCode card reader is that it gives consumers something which they can actually hold and provides a physical element to the otherwise virtual and intangible nature of online payment security.

Merschen said: "In terms of security this system provides a very real level of added protection but also a greater perception of security for the consumer."

Barclaycard's Taylor believes consumers who have previously resisted the convenience of online shopping will be encouraged by the added security - and that is certainly in his company's and MasterCard's best interests.

At the end of the day it is about encouraging users to spend more money on their cards.

Merschen added: "Ecommerce is still a very small piece of the cake. What we are doing is addressing one of the reasons why. We need to grow that piece of cake."

Already MasterCard is boasting 9,000 online merchants who have signed up for the scheme - although the largest online retailers such as Amazon.com and lastminute.com are currently conspicuous by their absence.

Barclaycard, which intends to provide the card readers free of charge, intends to start its UK trial early next year.