PayPal turns on security key technology
(InternetRetailer.com)PayPal Inc. is offering secure key
technology through an electronic token that generates a unique security
code approximately every 30 seconds. Members can use this code, along
with their user name and password, to sign into both their eBay Inc.
and PayPal accounts, all in the name of preventing unauthorized access.
Called the PayPal Security Key, the
technology uses two-factor authentication to protect consumers and
reduce losses from online fraud such as phishing attacks. The key
carries a one-time fee of $5 for PayPal and eBay account holders in the
U.S. The technology soon also will be available in Germany and
Australia, PayPal says, with more countries to follow.
“We’ve had a tremendously positive response
to the PayPal security key beta program and are excited to make the
device generally available,” says Michael Barrett, chief information
security officer at PayPal, which is a subsidiary of eBay. “While
PayPal.com remains a trusted and secure environment, the PayPal
security key allows customers to take their privacy and security into
their own hands to help protect their eBay and PayPal accounts against
unauthorized access.”
A PayPal spokesman declined to be specific
about token adoption rates thus far, but notes users number in the
“tens of thousands.”
When PayPal acquired VeriSign Inc.’s
payment gateway in late 2005, it agreed to distribute 1 million tokens
to its customers beginning in 2006. Beta testing actually began in
February 2007 and it has been well received, PayPal says.
Security issues are driving acceptance, and
PayPal won’t lose money on the tokens because prices have been falling
in recent years, Avivah Litan, a senior analyst at Gartner Inc., told Internet Retailer.
“I was skeptical of the VeriSign payment gateway acquisition at first,
but PayPal has gotten more enthusiastic about the tokens because
security problems have gone from bad to worse. The tokens are selling
pretty much at cost, so at least they will break even,” she adds.
Token technology has not been tried much
for online shopping, but didn’t fare well among the general population
when AOL tried it some years ago, Litan says. “AOL tried, but didn’t
market the technology and it failed,” she says. “PayPal is really the
first mass consumer payment provider to offer the technology.”
Litan predicts younger PayPal and eBay
customers will adopt the security key technology sooner than the
average credit card customer. “From a pure voluntary adoption
standpoint, they will probably get up to 10% of their user base on
board,” she adds.
The security key is part of the VeriSign
Identity Protection Network. Consumers in the network can use the key
to protect themselves on a variety of financial services and e-commerce
web sites.
PayPal has promoted the security key option
to members on its web site since early this year. To date, the only
other means of promotion has been via word of mouth, the spokesman
says. News of the program might be included in future member e-mails,
he adds.
