Whilst purchases through the Internet are rising sharply, credit card fraud is rising even faster to more than £117 million a year according to the Association for Payment Clearing Services. This is against a background of falling levels of fraud within the retail market generally, largely due to new chip and pin technology.

The problem is that chip and pin technology does not protect clients buying online as they cannot confidentially provide their pin number. So Visa has come up with a solution.

Known as Token Based Authentication, each time a cardholder wishes to buy over the phone or on the Internet, they slide their card into a small device small enough to be clipped onto a key fob. This device then randomly displays a four-digit code number. The customer then provides this code number along with their card details when confirming the purchase.

At the same time as creating the four-digit code, this cleaver little device automatically relays the same code directly to your bank. Then when the retailer contacts the bank to confirm the card details, the Authentication Code is matched up and this verifies that the purchase is genuine. Goodbye fraud!

Well Visa hopes it’s “goodbye fraud” - that’s why they’re testing it out before rolling the scheme out to all cardholders, probably at the end of 2006. Reports suggest that Token Based Authentication could be mandatory across all banks by 2008.

Postscript
We have recently noticed a marked increase in fraudulent e-mails which, on first sight, come from your bank. The e-mails warn you about the dangers of bank and credit card fraud and then ask you to confirm your banking or credit card details by e-mail. BEWARE - these emails do not come from your bank. They are part of a sophisticated ploy by fraudsters to get hold of your banking details. A genuine Bank will NEVER ask you to confirm details by e-mail. You must always IGNORE these e-mails and report it to your Bank.