Online shopping is becoming the fastest growing online financial application worldwide. Whilst this trend is definitely the way forward for future financial transactions, there are a number of perceived security risks associated with this move toward payment convenience as many see the Internet as an insecure form of commerce.
Addressing these concerns, MasterCard Southern Africa is introducing a number of security initiatives to ensure that cardholders and Internet retailers are protected against online fraud in 'card-not-present' situations. It is believed that these initiatives will build consumer confidence in online shopping.
Current security concerns are two-fold: the risk for the retailer and the risk for the consumer. Traditionally, the payment liability has been the retailer's concern, posing a number of crucial problems and business predicaments for retailers. However, online retailers who have implemented a new solution from MasterCard called 'SecureCode' will be protected from unauthorised purchases.
MasterCard SecureCode is a unique authentication private code that links a cardholder to a particular transaction, which is aimed at giving the retailer clear evidence of an authorised purchase. A private code protects against unauthorised use of credit cards when cardholders shop at participating online retailers. It's just like entering a personal identification number (PIN) at an ATM.
Online retailers need only install MasterCard SecureCode software on their e-commerce servers in order to transfer liability for chargebacks to the issuing banks. In addition, issuing banks can deploy corresponding "access control servers" that respond to retailer requests for authentication. This end-to-end security solution will ensure all Internet purchases initiated by the cardholder are authenticated by requesting a PIN, user password and a digital signature.
"The liability shift will guarantee a security revolution within the online shopping industry as it not only ensures that card holders are free of risk when making purchases online but that retailers no longer carry the liability associated with fraudulent purchases", says Gary Byrne, vice president payments solutions, MasterCard Southern Africa.
The financial case for online retailers to offer MasterCard SecureCode protection to their customers is very strong. Research carried out by MasterCard International showed that:
Byrne says that he expects the online shopping industry to experience significant growth in the near future due to the increased security solutions and measures alleviating consumers' online shopping fears. It is anticipated that this in turn will encourage a new wave of consumers willing to shop online for an array of products. This could be the tipping point that makes 2005 the year that Internet shopping goes mainstream.
