Online payment service, PayPal, is testing a virtual debit card with a constantly changing identification number. The card number changes every time it is used.
The new card is issued by MasterCard and is designed to make it impossible to steal a user's identification from a merchant. Chris George, Pay Pal's senior director of financial products, calls it, "A nice virtuous circle," that boosts customer comfort in making online purchases, and letting them do so in many more places.
The technology comes from Orbiscom, a technology company in Dublin, Ireland that first came up with the idea in 1999. Since then, banks ranging from Citibank to Bank of America have used some form of the idea for credit cards.
PayPal began contemplating the idea in the summer of 2005, according to George. "We were brainstorming new innovations that would advance security and make PayPal customers feel more secure," he says.
Employees of the company, based in San Jose, CA and owned by eBay Inc., began testing the concept in May 2006. In November, the test was expanded to four million of PayPal's loyal users.
The launch comes as consumers have already become comfortable making online purchases, says Priya Raghubir, associate professor of marketing at the Haas School of Business at the University of California at Berkeley. "I'm not sure this is the right time for this," she says, adding, "I'm curious why they think there is a market for it."
Orbiscom counters by saying that wariness about online security remains. Anxiety has risen over the past year, as consumers have read about many security threats and the loss of personal data, according to Diane Shaib, executive vice president at Orbiscom.
She claims that, "Billions of dollars of sales are lost because of fear." Shaib cites a 2006 study by the Cyber Security Industry Alliance, which found that 50 percent of consumers were concerned about the safety of their financial information online.
The program, which is initially available only for PCs, includes a program that downloads to the desktop. It detects a purchase and automatically fills out a form that is filled with the user's name and address. Users can choose a different address for shipping and billing.
At the area on which a user fills in the debit card number, a MasterCard debit card appears on the screen, and PayPal generates an ID number for it. The number is connected only to that single purchase, George explains.
The next time that customer uses the Virtual Debit Card, a different number is generated and filled in on the form on the screen. PayPal has not disclosed how many people have used the card, but George reports, "Activity per user is ahead of where we thought it would be."
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