HSBC plans to launch a secure online credit card processing service to encourage its business customers to trade over the internet.

The business banking portal is being piloted with a small group of companies after two years of development. It is likely to be unveiled, initially in the UK, later this year.

The aim of the initiative is to overcome the reluctance of many merchants to selling over the web, says senior project manager Paul Baker.

'On the internet there is a big issue - how can you prove that it is the credit card holder that has performed a transaction? The retailer bears the full risk. Only three per cent of card transactions are over the web - it's quite low because of a lack of trust on both sides,' he said.

Bakers says that for every disputed credit card transaction from a face-to-face purchase, there are 19 disputes over internet purchases. 'A merchant can't stand the cost of that,' he said.

'We're trying to be a bit radical. We want to say to retailers - we're a bank, let us collect payment and comply to the regulations on your behalf. You get on with selling.'

HSBC's service will support existing ecommerce security and authentication initiatives such as Verified by Visa and Mastercard SecureCode. Baker says it will particularly appeal to smaller companies that would prefer not to build their own systems.

The service is being built using payment processing software from vendor ClearCommerce, and will run on a resilient Sun Microsystems server farm using over 30 servers.

'We have over 70,000 merchants and the potential is there for everybody to trade on the internet. But it is a tough place to play. A company our size can deploy a system way beyond what many of our customers can do,' said Baker.