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Wednesday, 19 July, 2000, 13:16 GMT 14:16 UK
Money makes the world wide web go round
money machine
Spend money online without using your credit card
By BBC News Online internet reporter Mark Ward

Online banks are starting to adopt novel ways for people to spend money online in a bid to beat credit card fraud on the web.

Net banks Egg and Marbles are trialling payment technologies that they hope will reassure shoppers that it is safe to buy online.

A survey released this week reveals that shoppers' fears about fraud on the net may be accurate.

It found that online retailers experience 12 times more fraud than their high street rivals.

Fraud facts

The survey of 160 web retailers, conducted by technology consultancy The Gartner Group, found e-tailers are being squeezed because they are left to absorb the cost of crime.


The vast majority of consumers are concerned about releasing their credit card details on to the internet

Jim Harrow, Orbiscom
At the moment, credit card companies rarely lose out because they reclaim the money from fraudulent transactions from web retailers.

Card holders are usually spared any trouble because they are only liable for the first 50 of money someone else spends with their card.

Now, web banks are starting to trial technologies that remove the reliance on credit cards for online transactions and make the whole process more secure.

Egg meets Earthport

This week, Egg has started trials of a novel payment system developed by Hammersmith-based company Earthport.

The Earthport system corrals a portion of someone's money from their bank account and uses this as a pot to pay for online shopping.

Anyone signing up for the service, probably via an online bank, gets an electronic wallet that they access via a login name and password.

If an online shop offers the chance to pay via Earthport, consumers log in to its network to carry out the transaction.

The only information passed on to the shop you are buying from is the address where the goods should be sent.

SMS access

Earthport checks you have the money to spend and settles transactions at the end of the day.

The Earthport network can be used from a PC connected to the internet, a Wap phone or even using SMS text messages. Two people with Earthport accounts can even transfer money between their accounts.

Graham Newall, chief executive of Earthport, said the system was suitable for small value transactions as well as large ones. Eventually, people could be using it to buy a round of drinks at a pub or chocolate bars from vending machines.

"There are people that do not have a credit card to whom this will appeal," said Mr Newall.

It is likely that many of the household names found in the shopping section of the Egg website will be encouraged to use the Earthport system. Egg is trialling the service now and it is due to go live in October.

Money Marbles

Marbles is trying out a different system designed by Dublin-based firm Orbiscom, which puts a virtual credit card on a shopper's computer screen.

Every time the card is used a unique identifying number is generated that ties the transaction to a shop and a shopper.

The number is the same format as a credit card number and is checked in the same way. Jim Harrow, sales and marketing director at Orbiscom, said it was much more secure because it was tied to a particular transaction. It can be used with both credit and debit cards.

If the same number is used again the transaction will be stopped. Both Marbles and Allied Irish Bank are trialling the Orbiscom system and expect to make it widely available towards the end of the year.

But Earthport and Orbiscom face competition from companies such as Worldpay that works within the credit card system and which has signed up Freeserve and Virgin Biznet.

Fraud fears

"The vast majority of consumers are concerned about releasing card details on to the internet," said Mr Harrow.

He said they feared their details would be hijacked, leaving them with a huge bill to pay.

While there is little danger of credit card details being intercepted as they are sent across the internet, criminals have other ways of getting hold of numbers. Many use number generators to produce legitimate credit card details and then use these to shop online.

There is a pressing need for a new way to secure purchases made over the internet since credit card companies abandoned a technology they were developing.

In 1996, Visa and other credit card companies announced they were working on a system to reduce fraud called Secure Electronic Transactions (Set). But Set has proved costly and cumbersome to use and very few banks and shops have adopted it. Now, Visa and other Set developers have abandoned work on the system and are looking for alternatives.

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