Encrypting The Plastic Currency

Credit cards are not made to function on the Net," says an official of a popular credit card company, summing up the widespread reluctance to type out card details on the Net. A survey of 5,000 cardholders in 15 Indian cities by the Udaipur-based Credit Card Management Consultancy found that 72 per cent refuse to go online fearing misuse. That's a big number, but not big enough to worry card companies. Reason: Net transactions account for just 2 per cent of all card purchases. A clear case of circular logic and completely without basis.

For, the e-tailer is a worse victim of fraud than the shopper. This is how it happens. Most shopping sites only ask the credit card number and shipping address before authorising a purchase. In the event of a customer refusing to pay, the onus falls on the merchant to prove that the transaction has actually been completed. This is not easy. Often the customer gives a shipping address which is different from that of his card billing address.

Secondly, customers are never asked to give any other personal details as a precautionary measure. As a result, the merchant often has very little information to plead his case effectively. A fraud transaction not only means an erosion of profits, but often that he has to pay an additional charge-back fee to some card companies.

From the consumer's point of view, should he decide to contest an online purchase, he has to first inform his credit card company. Then he has to fill a declaration form, after which his card-issuer gives him temporary credit for the amount. If the investigation proves that he has indeed made the purchase, he has to pay up the contested amount plus Rs 100 as penalty. However, if he delays the payment, he also has to pay the interest on the contested amount for the entire period of investigation, usually six months.

E-tailers argue that the benefit any e-transaction enjoys over a physical purchase is the temporary credit, which is not very forthcoming in the case of an offline transaction dispute. That's because any physical purchase carries the signature of the customer as proof of the transaction and even in case of a fraud, the cardholder has little option but to pay up.

And then the widespread fear that credit card information can be hacked on the Net. This too is equally unfounded. Once the customer confirms payment by card on a particular site, the gateway company—usually a bank that handles credit card payments online—opens its page, accepts the card number, encrypts it, sends it to the host (card issuer), takes authorisation and sends the advice to the site which confirms the transaction. The card details go in 128 bit encryption in secure socket layers (ssl) which even card-issuers agree are very difficult to hack.

If you are still uncomfortable about putting out your card number on the Net, you could use a cheque or pay cash on delivery. Some sites like firstandsecond.com have come up with coupons called readymoney which can be bought in 370 college campuses in denominations of Rs 100. Green, another pre-paid card introduced by Bangalore-based smartcc.com, is ideal for small purchases like books, music tapes and exam question papers. Citibank and icici offer virtual cards—a number with an expiry date and a password. The transaction is complete only when you punch them all.

So breathe a little easy next time you click to shop.