Visa Lures E-Shoppers with Online Password Security

Online shoppers concerned about credit-card fraud can sign up for added security under a program introduced Monday by Visa USA.

The new "Verified by Visa" program works with participating banks to validate cardholder identity through the use of passwords during the online checkout process. Visa said the plan "gives consumers greater control" over their credit cards and will reduce the potential for unauthorized card use on the Internet. Visa also is hoping the new plan will lure more shoppers to the Web.

"More people are spending greater amounts of time online, but when it comes to Internet purchases, some cardholders are still sitting on the sidelines," said Visa USA president and CEO Carl Pascarella.

Ready for the Holidays

The Verified launch comes as the holiday shopping season gets under way. Early evidence points to a surge in online shopping, with Jupiter Media Metrix last week reporting a 43 percent year-over-year rise in e-tail spending during Thanksgiving week.

Even so, some consumers remain concerned about punching their credit-card number into a computer. A report released last month by McKinsey & Co. said lack of trust is holding back many would-be Web shoppers.

Visa said it introduced the new service after conducting a survey of consumers in November. Seventy percent of survey respondents said they would feel safer about shopping on the Web if they could use a password-protected system.

Cleared for Takeoff

Visa already exempts shoppers from liability if their credit cards are used without their consent. The new service, Visa said, is an "extra precaution" consumers can take if they wish.

Registration can be done on the Visa Web site or through participating banks. Once a consumer registers, participating online merchants will ask for a password after the shopper hits the "buy" button.

Dell, BOA Sign On

Dell Computer (Nasdaq: DELL), one of the retailers participating in the program, said it should help get some potential e-shoppers off the fence. "Greater consumer confidence in e-commerce ultimately means increased online sales," said Todd Penner, online marketing director of Dell's consumer division.

Visa said it is advertising the Verified program online, in print and on television. Banks, too, will help push the plan to their customers. For example, Bank of America (BOA) said Tuesday that it is offering the plan to its more than 11 million cardholders.

"When combined with a participating merchant site using secure socket layer encryption, Verified by Visa may offer one of the most secure online shopping experiences available today," said Jai R. Dorsey, product manager of BOA's bank card services and e-commerce marketing division.

Visa first announced the Verified program in August.