Credit card fraud via internet

The disadvantage of current internet credit card payments is the lack of security. Although nobody can intercept the credit card number due to the usage of SSL server certificates there is no proof that the credit card number was indeed entered by its owner. Everybody who knows the card number and expiry date could pay with the card via the internet. In order to protect the card owner he can reverse the payment. From the merchant's point of view this means that he doesn't get a payment guarantee yet but the credit card companies have changed the rules significantly lately.

The credit card issuer is liable in the future

Merchants already get a large-scale payment guarantee for transactions in case they participate in the credit card companies' systems (Verified by VISA, MasterCard SecureCode). This liability shift has consequences for you as credit card issuer. Already the matter of fact that the merchant installs the software and tries to generate such kind of payment transaction leads to the result that the liability is shifted from the merchant to you. Rejects a customer a payment (just by telling "I did not purchase these goods") you have to credit the amount to the customer but cannot pass on the charges to the merchant. Therefore you have to bear the risk.

Solution ServerWallet

But also you as credit card issuer can benefit from the changes. By means of using a ServerWallet the customer is identified during the payment transaction. He cannot return the payment on the grounds "I did not purchase these goods" because it was assured that it was the real credit card owner. The number of charge backs and therewith the cost-intensive handling is reduced. This leads to significant savings on your side.

Sample workflow of Payment with ServerWallet using PIN/TAN:

As part of the online shopping the customer fills his shopping basket, goes to the cashier and chooses "pay with credit card".

	The customer chooses the credit card brand (VISA or MasterCard) and enters his name, the card number and the expiry date.		A pop-up window of his bank opens (contains personal greeting). The customer authenticates himself by typing in his PIN.
	The transaction details are displayed in the bank's window. The customer accepts the payment by typing in a TAN.		In case the TAN is correct the customer gets a message that the authentication was successful. The customer closes the pop-up window.
	After the customer has closed the pop-up window the payment will be authorised via the online shop within the credit card network.

The establishment of a ServerWallet will decrease internet credit card fraud and is inevitable to avoid risks resulting out of the credit card companies' liability shift. Moreover it is assumed that many customers that didn't use their credit card for internet payments yet will change their behavior due to the increased security. These additional transactions will also directly increase the bank's income.