AMEX To Offer Disposable Numbers
Friday, September 8th 2000, 12:00 am
By: News On 6
NEW YORK (AP) â€” American Express said Thursday that it will offer disposable credit card numbers for safer online shopping.
The initiative, called Private Payments, will be offered free next month to American Express customers and small business cardholders in the United States.
The program is part of a new series of products the New York-based company will be launching to address privacy and security issues that have discouraged many people from online shopping.
Private Payments allows customers to buy online without transmitting actual card numbers over the Internet. For each online purchase, the customer obtains a random number from an American Express Web site that expires after the transaction.
``Consumers have a real fear of having their credit car stolen,'' said Alfred F. Kelly, Jr., group president of U.S. consumer and small business services at American Express. ``This fear is the biggest obstacle for a real boom in e-commerce.''
Kelly said a slew of studies have found that 60 to 70 percent of consumers fear credit card fraud stemming from online use.
American Express also announced that it would work with digital privacy company Privada Inc. on a second product that will let consumers choose how much information to reveal when browsing the Web.
Kelly declined to offer more details, but said that the service would be available at year's end.
``The whole experience of browsing is very different from browsing in the store,'' he said. ``With e-commerce, people know who you are. It's tied to the experience.''
American Express has made several moves to address privacy and security, including its offering of its Blue card. The card, introduced a year ago, is embedded with a chip that allows consumers to transfer credit card information directly to online merchants via a card-reading device that is attached to PCs.
Kelly emphasized that the company's Private Payments program reaches out to a much broader audience than its Blue card, which caters to a ``tech savvy'' customer.
Kelly admitted that the blue card payment process had been a little clunky at first.
Using Private Payments should be simple, he said.
At the time of purchase, the customer transfers the random, one-time number to the merchant order form to complete the purchase. The item bought is charged to the cardmember's selected American Express card.
Preston Dodd, senior analyst at Jupiter Communications, an Internet consulting firm, called American Express's initiative a ``powerful one-two punch.''
A number of credit card companies are pursuing tighter security, he said, but ``It has to be inventive to rival what American Express is doingâ€” or similar but done very soon.''
Dodd says fears over online credit card security are exaggerated.
``You are actually safer on the Internet than at a restaurant,'' he said.
Online credit card transactions by reputable Internet merchants are encrypted, although credit card numbers, once stored on Web site servers, can be susceptible to hackers if the merchant's security is lax.