A New Zealand insurance broker is to offer protection to online merchants and users from credit card fraud.
Online merchants usually bear the brunt of credit card fraud — they end up out of pocket for products bought using fake or stolen credit card numbers.
But Willis New Zealand plans to offer insurance for merchants and users alike.
“Basically it’s all ready now, we’re finalising the deal with an insurer for the merchant side of it but the consumer side is available now,” says Ian Thompson, national manager for cyberspace risks at Willis New Zealand.
The consumer insurance package is designed to encourage the “second wave” of consumers online, says Thompson.
Many customers are already relatively happy to use credit cards online, but there is a widespread belief that it is highly risky and more dangerous than using a credit card in the real world.
Thompson says added protection in the form of an insurance package should help alleviate those fears and coax first-time shoppers online.
“This is more of a marketing tool to give comfort to clients,” says Thompson. Merchants will buy the insurance package and build the cost into the selling price.
Customers will be able to contact the merchant directly if they discover their card details have been used inappropriately and receive a prompt refund.
“Dealing with the card companies isn’t always that easy — it can take a long time and be an arduous process.”
Thompson says this way it’s a simple email to the merchant and should be a hassle-free resolution to an unpleasant situation.
Providing cover for merchants is the other end of the stick. Merchants have been crying out for banks to offer greater levels of protection for months.
In May 1999 a Telecommunications Users Association event focused on computer crime was dominated by e-merchants calling for better security, but little has changed to date.
"Merchant insurance is something we've been after for ages - it will be a real boost to e-commerce in New Zealand," says Auckland credit card security consultant Craig Ellmers.
Ellmers, a director of C&S Consultants, says the need for consumer insurance is less vital. However, the demand for merchant insurance will be high as the banks still aren't providing merchants with enough information.
Banks typically only tell merchants if the card number being used is on the stolen list or not. Merchants say that isn't enough information and they need to know details like the cardholder's name, expiry date or even whether the card is currently active or not.