MLegg

Published at 01:00, Friday, 25 May 2007

Online shoppers could soon be required to use “chip and pin” machines in their own homes in a bid to tackle internet fraud.

A number of High Street banks are already planning to send out millions of card-reading devices in the coming months for online customers wanting to transfer money from their account to a third party.

If successful, the system could be rolled out to cover all online transactions such as internet sales through popular e-retail websites, card issuers and payment association APACS suggested this week.

Last year, online banking fraud costs UK banks £33.5 million, up 44 per cent on figures from 2005.

To combat the rising trend, the banking community hopes that “multi-layer authentication” may prove a barrier to people trying to defraud customers over the internet.

Card-reading machines the size of pocket calculators will be sent out to customers of banks and building societies – including NatWest, Barclays and Nationwide – over the months to come.

When making a bank transfer to a third party, online customers will have to insert their card into the machine and type in their PIN to identify themselves.

A randomly-generated number will then appear on the reader’s display screen, which will need to be typed into the computer before a transfer can be authorised.

Hundreds of thousands of the machines will be sent to customers free of charge over the next few months.

It is hoped that the technology will thwart fraudsters who use sophisticated software to record the passwords and card numbers of online consumers.

Although initially intended for online banking customers, banks and UK payment association APACS said the technology could be used in the future when buying goods online.

Published by http://www.cumberlandnews.co.uk