Card fraud is still a huge problem in the UK. In 2012 credit and debit card fraud increased 14% compared to 2011 (UK Card Association Stats). Card not present transactions such as online and phone payments saw an 11% rise.
When taking payment face-to-face chip and PIN is normally used to authenticate the transaction. However, for card not present transactions, card details are confirmed by other methods. Online merchants use details such as the CSV number for additional security. Verified by Visa and Mastercard SecureCode are used by the card companies.
Now, however, chip and PIN can be used at home. A company called Secure Electrans have developed an inexpensive chip and PIN reader which works with your PC, phone or other audio-visual device to make chip and PIN payments from home.
- Familiar with chip and PIN
- No need to input card details online
- Single security device for all transactions
- Fewer rejected transactions
- Fewer abandoned transactions due to workaround authentication processes
- Increase in consumer confidence in e-commerce shopping
- Reduced basket abandonment
- Leverages existing Chip & PIN infrastructure
- Projected increased eCommerce operating margins
- Reduced costs and losses due to fraud
- Fewer valid orders rejected
- Allows merchants to invest in eCommerce expansion with confidence
£15 million has been invested in development to date with trials ongoing. According to Secure Electrans zero fraud has been seen during trials to date.
Online Chip and PIN
Online card fraud is certainly a problem that needs addressing. 2/3 of all card fraud is online card not present. Customers are wary of entering card details online because of security dangers such as phishing. Current methods are simply not working well enough. With shopping online expanding at around 13% year on year the annual cost of online card fraud is set to rise too.
One major hurdle at present is who is going to pay for every home to have a chip and PIN machine. Customers are unlikely to pay so it will be down to the merchants or the banks. It is a considerable investment so only when the numbers make sense is it likely investment will be made.