Resellers will no longer be liable for money lost as a result of card-not-present (CNP) theft if Barclaycard's latest fraud-busting scheme takes off.
The credit-card giant, in partnership with security vendor nCipher and MasterCard, has issued card readers to 5,000 consumer customers for online transactions, and plans to extend the scheme beyond the six-month pilot period if it is successful.
CNP fraud accounts for 40 per cent of credit-card losses and costs the channel millions of pounds a year. Until now card issuers have not reimbursed any money lost to VARs in fraudulent online transactions.
Ian Barber, a representative of Barclaycard, said the initiative, along with the ongoing chip and PIN scheme being implemented across the UK, shows banks are taking CNP fraud seriously.
"In the past the attitude was that the retailer or reseller took the decision to accept the card online without seeing it, so they were responsible for the outcome, which at the time was a fair stance to take,"he said.
"However, it is the first time we have actually given customers specific readers to guarantee personal card details. Now they plug in the reader, punch in a PIN and the transaction is secure.
"It gives customers the confidence to shop online and moves liability away from the resellers and onto the card issuer."
Glenn Morrison, managing director of VAR Upgrade Options, said: "If liability is switched from resellers it will increase their confidence and encourage them to develop their web sites. This in turn will increase online business, which is good for the development of the internet."
Russ Davis, chief executive of ISL Biometrics, said Barclaycard's scheme "is a step in the right direction" but claimed the most secure way to combat fraud is by using biometrics in credit cards.
"A fingerprint cannot be faked or copied," he said.
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