"Card-Present" Transactions From Across The Web? Not Exactly

New ideas for keeping E-Commerce payments secure are coming thick and fast—and some of their purveyors are playing just a little fast and loose with the benefit buzzwords. Case in point: On Tuesday (July 26), Jumio announced a service called Netswipe, which lets E-Commerce customers hold payment cards up to their PC's webcam for processing. The Netswipe software takes over the webcam to scan the card using secure streaming video, decide if the card is real or fake and then extract the card number. The idea is clever. Not so clever is Jumio's boast that this lets E-tailers do "card-present" transactions remotely.

Card present? That's certainly the right buzzword to get the attention of big retailers, who know it means lower interchange fees. But what exactly does it mean to have a card-present transaction where the card is only present at the far end of an Internet connection? Answer: Not much.

The term "card present" does still mean something. "It is a card brand term that means the magstripe was read as part of the authorization," said StorefrontBacktalk PCI Columnist—and QSA—Walt Conway. "Somehow I don't think my webcam can quite do that yet. The best [Jumio] might be able to claim is equivalent to a key-entered transaction."

Jumio also calls Netswipe "PCI ready," although there's no sign that the PCI Council is ready for remote-payment applications like this. And Jumio's credibility isn't helped by its repeated claims on Tuesday about its "patented Netswipe solution"—which is actually a patent-pending process. Only time and the Patent Office will tell whether Netswipe will ever be patented.

Jumio founder Daniel Mattes has been describing Netswipe as "Square without hardware." The irony is that Square actually can do card-present transactions, because it has hardware to read the magnetic stripe. No hardware? No card-present transactions.

It's easy to understand why Jumio wants to stretch the meaning of those buzzwords. It's not the first startup to use a camera to scan payment cards—AisleBuyer and Card.io do that, too—so it's playing catch up. And it is nice to see that payment startups are beginning to show an understanding of what will make retailers sit up and take notice.

Now if only they can actually deliver something that will cut interchange rates—that will hold retailers' attention.

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