UK eBank Cahoot will launch a virtual online credit card.
It seems that banks are finally becoming aware of the need for secure alternative payment methods for the Internet. UK bank Cahoot on Tuesday joined the likes of Allied Irish Banks, Cartes Bancaires and Discover in offering its customers Orbiscom’s Controlled Payment Number (CPN) technology.
Capitalizing on the ubiquitous and trusted method of the credit card, Orbiscom’s solution has so far proved successful. In providing registered users with virtual credit card numbers that can only be used once or with one individual merchant, it addresses consumers’ fears of giving out credit card details online.
Nevertheless, the debate still continues as to what the standard for secure Internet payments will be – and more importantly, whether the system will be controlled by the banks, third party technology providers, or a new player altogether.
Credit cards look set to retain their title as king of online payments for the moment. In the last year, 91% of European online shoppers and 97% of American online shoppers used this payment method. But it’s not clear which security solution for credit cards will win out. Solutions such as Orbiscom’s CPN technology currently dominate, but may be usurped by the smart cards that are gradually being introduced around the world.
Credit cards, however, are not suitable for everyone or every transaction, most notably failing to cover small ticket purchases and teen payments. Banks have been slow to fill this obvious gap in the market, with new players such as PayPal, Splash Plastic and QPass taking the initiative.
If banks want to avert this potential threat, then they must act now or risk being fully disintermediated from this part of the payment value chain. However, the ePayments market is now too technologically complex for banks to enter alone. If the banks want to rival new market players, they will have to do so in conjunction with third party technology providers, such as Orbiscom and iPin. These firms will be the real winners in the Internet payments game.
