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Verified by Visa and Mastercard SecureCode: Reducing Online Fraud

10th January 2011

The Internet has opened the doors to a whole new way of shopping. People can now make purchases online, saving them the time and hassle of visiting the shops. Significant savings are also available online for many products, and websites such as eBay and Amazon allow people to buy second hand goods, and even sell items of their own.

The popularity of purchasing goods online has risen massively over the last ten years. Most websites offer the function to pay via debit or credit card, which is what the majority of online shoppers do. Whilst this is a quick and easy method of payment, it also provides fraudsters and other criminals with opportunities to steal your card details and, in turn, steal your money. As well as costing you a bomb, your credit rating is likely to be severely damaged if your bank account is hacked.

Luckily, some new technology has been developed to help prevent online fraud. The financial companies Visa and MasterCard have developed systems that aim to improve the security of online transactions made by card. The systems, known as 'Verified by Visa' and 'MasterCard SecureCode' respectively, are targeted at consumers who were once reluctant to use their credit cards to shop online. It is hoped that over time, the levels of fraud will reduce substantially, increasing consumer confidence and boosting the importance of e-commerce in today's economy.

Both systems work by introducing individual passwords that will be needed to make transactions using your card. Known only by the cardholder, these passwords essentially act as a 'virtual signature' - it assists in verifying the identity of the customer using a card to make a purchase, as a transaction is only completed when the password is entered successfully.

To get cardholders to enrol onto the system, many card issuers are making signing up to it part of an online transaction. So whilst you are buying something online using your credit or debit card, a pop-up box will appear, informing you about Verified by Visa and MasterCard SecureCode. From here, you have the option to sign up, but you are not compelled to do so if you are pressed for time. Alternatives include signing up on your bank or credit card provider's website.

An initial issue with Verified by Visa was one I encountered myself. During an online payment, the little box popped up. Being wary of online fraudsters, I questioned the legitimacy of the system itself - is this a criminal trying to steal my bank card details? Of course, the Visa logo and such was there, but this was no guarantee for me that the system was indeed run by the company. Thinking it foolish to give my account details to a pop-up box (the stigma associated with pop-ups didn't help) I choose not to sign up. Later on the Visa website, I discovered it was a secure system, and signed up.

But many customers may see it as fraudsters trying to seize their credit card details, an issue the companies are dealing with. The system has indeed seen a drop in the activity of online fraud, and once it has expanded should become more effective.

So if you do have a credit or debit card, it is definitely worth signing up to Verified by Visa or MasterCard SecureCode before making any more financial transactions online. It could potential save you from the trouble and debt of having your bank card details stolen.