Press Centre

---

PayPal testing a virtual debit card

Silicon Valley/ San Jose Business Journal
Timothy Roberts
January 12th 2007

Online payment service PayPal is testing a virtual debit card with a constantly changing identification number. The card number changes every time it is used.

The intent is to make it impossible to steal a user's identification from a merchant, but the new card, issued by MasterCard, also makes it possible to use PayPal at sites that don't otherwise accept San Jose-based PayPal, which is owned by eBay Inc.

The virtual debit card has become what Chris George, Pay Pal's senior director of financial products, calls "a nice virtuous circle," boosting customer comfort in making online purchases and letting them do so in many more places.

The technology comes from Orbiscom, a Dublin, Ireland-based technology firm that came up with the idea in 1999. Since then, banks ranging from Citibank to Bank of America have used some form of the idea for credit cards.

The idea arose at PayPal in the summer of 2005.

"We were brainstorming new innovations that would advance security and make PayPal customers feel more secure," George says.

PayPal employees were given a chance to test the idea last May. Then in November, PayPal gave four million of its most loyal users an opportunity to give the card a try.

The release of the card comes as consumers already have become comfortable making online purchases, says Priya Raghubir, associate professor of marketing at the Haas School of Business at the University of California at Berkeley.

"I'm not sure this is the right time for this," she says. "I'm curious why they think there is a market for it."

But Orbiscom insists that fear is still a factor. Anxiety has risen over the last year as consumers have read about many security threats and the loss of personal data, says Diane Shaib, executive vice president at Orbiscom.

"Billions of dollars of sales are lost because of fear," she says.

Shaib cites a 2006 study by the Cyber Security Industry Alliance which found that 50 percent of consumers were concerned about the safety of their financial information online.

The program, which is available only for the PC so far, includes a form fill program that downloads to the desktop. It detects a purchase and fills out the form with the user's name and address. Users can choose a different address for shipping and billing.

When it comes time to fill in the debit card number, a MasterCard debit card appears on the screen, and PayPal generates an ID number for it.

The number is connected to that one purchase, nothing more, George says. If someone stole the number, it would not lead to the customer who used it. The next time the customer uses the Virtual Debit Card, a different number comes up.

PayPal isn't releasing any numbers on customer use, but George says, "Activity per user is ahead of where we thought it would be."

http://sanjose.bizjournals.com/sanjose/stories/2007/01/15/story9.html

---

---