New online payment systems: Banks wary of backing them
The new payment systems, POLi and eWise, are eagerly trying to push their services to online retailers, banks and their consumers. The new payment systems tie up with online retailers and banks so that their consumers can easily make payments online without giving away any personal financial details.
Customers buying from such retailers can make payments by clicking on links from the retailer’s website to the login pages of participating banks. After they login, Customers can credit due amounts directly to the retailer’s bank account. The amount due and the account number of the retailer are auto-filled in by a software downloaded into the user’s system on activation of the new payment service.
New payment systems helpful in some ways
The new payments systems are not without its advantages. It is especially helpful for online retailers. This system does not require them to collect or store any customer related info. This reduces their liability to risks of customer data loss. After the TJX fiasco which resulted in the compromise of personal financial data of 45 million customers, the new service would find eager takers amongst online retailers.
The new payments systems are less vulnerable to phishing scams as consumers are not required to reveal any confidential data online. These services also work for those customers who do not have credit cards. Such consumers can buy online and then make payments for their purchases through their bank accounts.
Banks have real concerns with the new payment systems
Banks are staying away from the new systems as they are worried of the consequences of opening up their back end systems to outside agencies. They also feel it may raise risks for their customers.
- System especially vulnerable to being hacked. First of all, the system is vulnerable to the most common mode of hacking online: malware. Since the service would require downloading and installation of programs onto user computers, it provides a way for hackers to break in. Fraudsters can open fake sites and email account holders they need to upgrade their version of the service enabling software. In this way they can install malware onto computers permitting capture and relay of personal account information of the account holders.
- No takers for liabilities arising from use of service. Under the present system, payment service providers like PayPal refund users who fall prey to online fraud fr om using their services. There are no takers for liabilities in the new systems as boundaries between participating services become very thin. Therefore, it is very difficult to pin down responsibility. As of now, neither POLi nor eWise have shown any inclination to take up responsibility on this count.
- eWise not in their good books. eWise has raised the ire of the banking community ever since they launched their account aggregator service. This service enabled eWise users to access any number of bank accounts using single login identification. Banks warn this would put to risk all the bank accounts accessed with the ID, in case it gets stolen.
These concerns are in the interest of every online customer. New payment systems, like POLi and eWise, should address them, if they wish to raise the credibility of their service. This would, in return, lower resistance and increase acceptance of their services.
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- Hawaii National Bank hit with two Phishing scams, one disguised as a Survey
March 12th, 2009 at 3:13 pm
This is the way things should be, get off what we are on now