Online security concerns and payment fraud continue to challenge both businesses and consumers, with a seemingly neverending stream of new scams eroding confidence in those who may be more nervous making online payments. A new payment method, designed to offer a more secure and familiar transaction process, aims to address these issues.
A man named Justin Pike and his team have developed software that allows users to make online payments by tapping their bank card to their phone and entering their PIN, replicating in-store transactions. The idea came after Pike saw his mother-in-law struggle with online shopping during the pandemic due to concerns about fraud.
How it works
Online transactions are typically categorised as “card not present” (CNP) because buyers must manually enter their card details. In contrast, in-store purchases fall under “card present” (CP) transactions, where a physical card or payment device like a mobile phone wallet is used.
The new technology, called “card present over internet” (CPoI), brings the CP model to online shopping. By removing the need to manually enter card details, it may help users feel more secure when making purchases, as well as increasing security due to removing the need to store sensitive data.
Security and cost benefits
CNP transactions carry a higher fraud risk, with UK Finance reporting over 2.1 million cases of CNP fraud in 2023. Due to this risk, payment processors charge retailers higher fees per transaction for CNP payments.
By reducing the level of fraud risk, CPoI could lower processing costs for online sellers. It may also encourage consumers who have been hesitant about online shopping to feel more confident when making digital purchases.
The goal is to introduce this payment option before the end of 2025. If widely adopted, it could provide benefits for businesses and customers alike. So it’s definitely one to keep an eye on, if you’re a business who takes payments online, or you are thinking about starting to!
You can read the original BBC story here.
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