Online banking payment system aims to reduce fraud

Online shoppers in the UK will be able to pay direct from their online bank account rather than via a credit or debit card, thanks to a new service.

The POLi online bank payment platform aims to increase payment choice while reducing card-not-present fraud, a category of fraud covering ecommerce transactions which is on the rise. UK card-not-present fraud rose from £212.7m in 2006 to £290.5m in 2007, an increase of 37 per cent.

The technology behind POLi was developed by Australian firm Centricom Pty. According to merchants in Australia using POLi, the service now accounts for an average of 23 per cent of their total online payment transactions.

Centricom teamed up with UK-based online payment firm Neteller last August to launch a joint venture to roll out POLi in Europe, starting with its launch in the UK last week. The service, distributed through Neteller’s payment processing arm Netbanx, supports transfers from all major UK high street banks.

Netbanx is in the process of recruiting merchants to POLi among its client base and key target markets, such as the travel and event ticketing industries, where confidence that transactions will be quickly and reliably settled are particularly important.

Merchants would offer a "pay-by-POLi" option. Clicking on the link prompts users to select and then log into their online banking accounts where payments are made and authorised. Once users log-in they will see the merchant's details and the amount of the purchase, as explained here.

David Clark, Netbanx's director of product development, told El Reg that the service lowers risk because it offers indemnified payments. POLi pricing is based on volume of transactions, rather than a percentage of sales charged to merchants by credit card firms. As a result, costs to merchants and consumers alike ought to be lower.

Merchants need only store transaction ID numbers and dispatch details, without a requirement to store information on a customer's online bank account. Clark argued this was among the factors that made POLi more secure than paying by plastic.

POLI has previously been rolled out in Australia, New Zealand and South Africa.

According to Netbanx, the service is superior to US services such as ebillme as it is directly integrated into online banking accounts, so merchants know immediately when transactions have cleared rather than relying on consumers authorising payment through their online banking account. ®