What’s on the horizon for internet payments? Chip and Pin?

Why do we enjoy shopping online?

Convenience is a major advantage. Today people can shop from home, work, on the go – anywhere they’re connected to the internet. Another advantage of online shopping is the sheer amount of choice. In just a few clicks you can buy all sorts of goods from all over the world. It saves walking round endless shops and being restricted to certain domestic products.

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What are the perceived disadvantages of online shopping?

One of the disadvantages of online shopping is that sites often use poor product descriptions and images, making it difficult for customers to determine the quality of a product. There are also concerns over payment security. Many customers are left wondering whether they’ll be left vulnerable to identity fraud.

Payment security worries, when shopping on the internet led to the introduction of 3D Secure by the major card companies. 3D security reduces online payment fraud and makes internet shopping more secure. Has it also put some people off internet shopping?

3D secure asks the customer to input a password when buying goods and services online. Many people have trouble remembering the password and research has shown this payment security is a significant cause of abandonment of baskets and trolleys in ecommerce.

The introduction of a Chip and Pin system of payment online would simplify the payment process, there would be no complicated password to remember, just the normal pin you use when buying in traditional shops, four easy to recall numbers. So why isn’t Chip and Pin used for online shopping?

• Keeping the customers pin secure when they enter it on their Smartphone, tablet or PC is problematic.
• The retailer could potentially have access to the pin, if it’s entered into their checkout system.

However a new software known as The PINpad has been designed to combat these security issues. The software works in the following way:

•  Offers the customer a different keypad every time they enter their pin.
• The pin is then transferred to the secure hardware of the card company where it is decoded, verified and either authorised or declined.
• The retailer would receive the standard responses of a POS.

This software is as secure as a face to face Chip and Pin transaction for the retailer and the customer doesn’t have to remember additional complicated passwords. It seems like the perfect solution to make online shopping even more attractive. The first UK use of PINpad is expected later this year.

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