The U.S. Census Bureau reports that U.S. retail eCommerce sales for the second quarter of 2008 totaled $34.6 billion (U.S.), an increase of more than 9% over the same period in 2007, while total retail sales increased by only 2.5%. Statistics Canada reports that, “Online sales increased at a double-digit pace for the sixth consecutive year in 2007. Total private and public sector Internet sales hit an estimated $62.7 billion, up 26% from 2006.”While these figures still represent a relatively small percentage of the retail market, the numbers are staggering. eCommerce is big business.
But there's a problem inherent within the system.
Credit and debit cards, the primary payment system for online transactions, are really designed to be used face-to-face. In electronic purchasing there are too few ways for the merchant to be certain the credit card is being used by its owner, and no way for the purchaser to be sure their private information will not be disclosed by the merchant to a third party.
One obvious solution would be personal devices, such as the ones provided by HomeATM.
Consumers would swipe their own card - in their own home...and verify the transaction with a PIN. This solution provides double authentication to the merchant, and to V/MC, making it a more secure transaction.Two more important things happen with a personal swiper.
The fact that the consumer "swiped" their own card transformed what would've been a "Card Not Present" or CNP transaction, into a "Card Present" or CP transaction. CP Transactions have a signficantly lower Interchange rate.
Secondly, after they entered their PIN, what would have been a CP transaction further evolves into a CP with PIN authentication transaction, further reducing the Interchange fees, because it further secures the transaction.
Obviously, by not having to type your personal account number into a box provided by the merchant, you eliminate the potential for screen scraping, keylogging, or other methods used by hackers.
Another big benefit that lies within this scenario is that because consumers are inserting their own personal cards into their own personal device vs. a computer or merchant key pad – the vendor would never have access to the customer’s PIN. This would further protect the customer in the event a merchant's e-commerce website data is breached.Obviously, there would be no effect and it wouldn't affect consumer's who utilized HomeATM's personal swiping device...because their data wouldn't be there to be hacked in the first place.
Thus, when consumers are left to their own devices, it's a win-win situation for all involved.
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