Visa to issue passwords through Canadian banks

Visa Canada will be taking steps later this year to combat consumer concerns about shopping online by providing Internet passwords through issuing banks.

Visa Canada’s “”Verified by Visa”” program will be introduced in April. It is

a joint effort on behalf of Visa, the card-issuing banks and the online retailers. Visa Canada is asking participating merchants to install a small piece of software on their sites. If a consumer makes a purchase on a participating site, a message is sent to the issuing bank which responds with a pop-up window requesting the password.

To encourage merchants to sign up, Visa Canada will protect them from disputed charges. “” It’s kind of a chicken and egg,”” said Susan MacKeown, the director of e-Visa, Visa Canada’s online division. “”We need both merchants and card holders. It’s hard to entice merchants if they have to wait until the card holders are all signed up before they get any benefit for it.””

The program has been operating with Visa’s U.S. customers for a year, but it’s too early to tell what the impact has been on their spending habits, said MacKeown. She added that other card issuers like MasterCard and American Express have shown interest in using the core technology behind “”Verified by Visa”” called 3-Domain Secure, which works with the Secure Socket Layer (SSL) incorporated into most browsers.

Visa Monday released holiday season online shopping statistics (covering Oct. 1 to Dec. 31, 2002) that say the number of Internet purchases in Canada doubled over the previous year. But “”there’s a lot of room for growth yet,”” said MacKeown.

A November 2002 survey conducted by Maritz: Thompson Lightstone for Visa Canada revealed that 85 per cent 85 per cent of Internet users said they were not planning to purchase gifts online.

“”Far and away, security and fraud concerns were the top issues. A lot of surveys simply say, ‘Yes, I’m concerned,’ but these are people saying, ‘I am not shopping because of security and fraud concerns,'”” said MacKeown.

The study went on to state that 48 per cent of Canadian consumers would feel more comfortable shopping online if a password program was introduced.

Canadians are looking for an online shopping model akin to in-store purchases, like signing their name on a credit card receipt or entering a PIN number with a debit card to confirm their identity, said MacKeown.

While security concerns have dissipated somewhat over the last few years, some consumers still have qualms about Internet purchases, said Peter Stange, analyst in the Toronto office of the Boston Consulting Group.

“”I think a password system can alleviate some of those fears, but perhaps not all of them,”” he said. “”It’s probably a step in the right direction in terms of providing reassurances to consumers.””

MacKeown said all Canadian Visa-issuing banks should be on the program within a year. Scotiabank and the Canadian Imperial Bank of Commerce could not be reached for comment at press time.

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