Is there irony in this? Maybe it's only a nibble at the moment.

There seem to be a lot of pre-paid products coming onto the market being promoted as a safer alternative to credit cards on the internet.  In view of the fact that these are often marketed by credit card companies who might be seen as being to blame for the card security problem anyway, it should be surprising that consumers would want to pay for another account just to have what should have been provided with the original credit card service. 

Obviously consumers are prepared to pay additional costs for even a perception of security. 

This probably doesn't bode well for companies making security products unless they are selling directly to the consumer.  Will we see the market evolve to the point where the consumer chooses their own solution, pays for it, and tells their bank to interface with it, or takes their business elsewhere? Digital money requires trust in the digital information space and I read recently that banks aren't looking too good there, is this going to be the age of the digital money middlemen? There are certainly plenty of willing participants. BPAY is the latest, with some novel reasoning.

Is there a market for a consumer interface independent of the banks, which consumers use to pay in-store or on the internet, with the banks just acting as a repository for excess funds? 

Obviously there is if non-bank pre-paid debit cards are anything to go by. Very interesting.

Some charge $6 to charge the card and there are high fees for withdrawals. One could presume there would be a way to look after those excess funds too, and give the consumer some sort of reward for doing so, and it might not necessarily be payment of interest. It is always handy to have some other compelling reason for consumers to adopt a new service, ideally something that no one else offers, other than good security and competitive fees.

Perhaps free telephone minutes (offered by some prepaid providers on signup), no fee accounts, bus tickets? Would this be compatible with Shariah banking for instance?

There appears to be no shortage of merchants eager to participate in any new payment mechanism involving lower costs, but I'm not sure a credit card provider backed debit card will quite do that. Competition in pre-paid should see that $6 shrink pretty soon, and consumers will become increasingly price conscious in tough times. Are banks going to be the ones to benefit from their efforts to get customers digitising their money and internet banking? 

We are going to see some interesting developments in the next 12 months as we see a flurry of mergers and takeovers in an effort to remain competitive in a tightening market with governments everywhere anxious to see reduced fees for consumers, particularly for cross border payments.

I have previously mentioned the very active Santander, and ING look like they're worth watching, but I suspect those canny Scots are up to something too.