| Benefits to Consumers  | Consumers are growing increasingly wary of entering their credit card information on the web. While some card issuers will indemnify the consumer for fraudulent card trnasactions, no one will help the consumer to avoid identity theft, a growing concern as evidenced by the increasing number of magazine articles warning consumers about it. The X9.59 format helps preserve a consumer's privacy by use of a payment routing code in place of the consumer's globally unique account code which appears on credit cards today. When an attacker gains access to a consumer's account and other publically accessible information, they get the keys to the consumer's account. With this information the attacker can drain real money form the consumer's bank account and run up large credit card bills. The consumer gets no help in avoiding or rectifying this kind of attack on her good name. |
Benefits to Merchants
| | What most people forget is that it was Merchants that originated consumer credit as a means to increase their sales. After a while, the merchants began to make more money from the carrying charge on this consumer debt, than from the sales of goods or services. Then the banks overcame their reluctance to make unsecured consumer loans and began to issue their customers cards that any merchant in town would accept. To wean the merchants away from their own card systems, the bank guaranteed payment to the merchant if they followed the card association rules. One of those rules required the card to be present at the point-of-sale. In the virtual world this is not possible, so the banks were able to push the risk of loss on the transaction back to the merchant for the card-not-present transactions. Since the banks own the card associations, there is no incentive for them to find a solution which returns the risk of loss on a card-not-present transaction to the bank. Since most merchants have surrendured the control of unsecured consumer debt to the banks, they have had little leverage to redirect the risk of loss, and the banks have little incentive to reduce card transaction losses since they can redirect it to the merchant. Here is a description of the current plans by the banks to push validation onto the Merchants. |
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