Abbey National's online banking arm, Cahoot, is launching an Internet-based 'disposable' credit card, dubbed webcard, to reduce online fraud for online.

The idea is simple: people with Cahoot debit or credit cards enter their details into the bank's website and it generates a unique 16-digit ID number each time they wish to make an online purchase. As soon as the transaction is concluded, the number is rendered invalid, meaning your actual card details are never given out. (Refunds will work like normal though, as they are linked to that specific transaction.)

The technology was developed by Orbiscom, which it flogs to companies around the world. Cahoot is its first UK-based customer.

A year ago, Securicor announced a service that would allow shoppers to buy online without passing on their card details, but it's a lot less flexible than webcard as customers are limited to shopping with retailers signed up on Securicor's online mall.

American Express launched a similar service in October last year for the US market called Private Payments.

The danger is real; online retailers don't have many means to check card details and they are often caught out exposing their existing customers details on an unsecured website, such as Amazon subsidiary Bibliofind. Cahoot estimates that about 250,000 people have been victims of online fraud.

Last week, a gang of five were jailed for conspiring to defraud online banks by making multiple bogus credit card applications. The gang targeted Cahoot, along with five other banks, in its scheme. ®

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Related Link

More information about Orbiscom's product