Barclaycard to shift web-payment risk

Payment processing company Barclaycard Merchant Services (BMS) is considering introducing a card authentication service from Visa that promises to cut the cost of online fraud.

At present web-based businesses have to accept liability for illegal transactions, as card issuers demand that a credit card is physically present before payment is authorised.

But that will change for customers of Visa 3-D Secure technology, which adds an extra authentication level to web-based payments, requiring a Pin code or password as well as the card number.

The service is targeted at web-based companies hosting their own payment processing and those, such as BMS, providing an alternative outsourced service.

Payment provider WorldPay last month became the first company to sign up to the Visa service, and BMS says it may follow suit.

It has 1,000 customers signed up for its existing ePDQ service, where a consumer's credit card details are taken securely to a page hosted by BMS. The transaction is then authorised and sent back to the web retailer without them seeing the card number. Visa 3-D Secure service would add an extra layer of security.

"Visa's 3-D Secure initiative has the potential to provide a liability shift from the merchant to the card issuer. We are looking at the possible integration of technology such as this into our service in the future," said Bill Thomson, head of internet payments at BMS.

3-D Secure only provides protection for the retailer if fraud is committed with a Visa card, but Mastercard is also considering offering the same guarantee to web companies if the technology is used.

Just two per cent of fraud was committed over the web last year, representing £7m out of a total of £300m, according to research by the Association for Payment Clearing Services.

BMS is in the process of migrating customers to a new Clear Commerce payment engine for its ePDQ-outsourced payment service after ditching US company Cyber Cash. BMS needed software that was easier to upgrade and update for customers, said Thomson.

Users pay a £25 a month flat fee for the service and commission of one to two per cent on transactions depending on the size.