Barclaycard is in talks with leading UK retailers about plans to roll out pocket-sized card authentication devices for customers to use when shopping online.
The UK bank has been testing the Vasco-based chip card readers with 5000 customers and staff over the past six months. Users of the system are prompted to insert their card into the reader and enter their four-digit PIN code when shopping online. The reader and the card then generate a unique dynamic password for entry on the Web form.
Barclays is initially planning to use the system to cut down on card not present fraud, the fastest growing category of card fraud, which cost UK banks £150.8 million in 2004. But the system also has the potential to eradicate phishing fraud by introducing two-factor authentication at the bank Web site when consumers log on to their accounts.
According to a report in the Times, Barclaycard has initiated discussions with leading retailers about introducing the system nationally. Other debit and credit card providers are expected to follow suit, although this would require a complex logisitical operation masterminded by payments body Apacs.
Barclaycard suggested that the security devices would be given to its customers free. "We would not want to make it difficult for our customers to participate in the scheme," a spokesman told the Times.
The Barclaycard scheme is in line with proposals moted by Finextra in a recent news analysis article: Web of deceit