-----BEGIN PGP SIGNED MESSAGE----- Hash: SHA1 <http://online.wsj.com/article_print/0,,SB110056759053675009,00.html> The Wall Street Journal November 16, 2004 MONEY 'Virtual Debit Card' Aims To Combat Online Fraud By JENNIFER SARANOW Staff Reporter of THE WALL STREET JOURNAL November 16, 2004; Page D2 Consumers typically have been wary of using bank cards online. One bank's solution is to get rid of the cards. In an effort to ease customers' concerns about fraud and identity theft when shopping online, PNC Bank has launched a new checking account with a "virtual debit card." In addition to a regular debit card that can be used at automated teller machines and in stores, the "Digital Checking" account comes with an "eSpend" card. The card is basically a piece of paper with an account number, expiration date and verification code for making purchases online, over the phone and by mail order. Customers can set a daily limit for their eSpend card (say $1,000) and once that amount is spent, additional purchases won't be approved. PNC Bank, a unit of PNC Financial Services Group Inc., Pittsburgh, hopes the eSpend card will attract people who want to make purchases online with their debit card but are uncomfortable doing so for fear of making their bank account vulnerable to fraud. If an unauthorized person obtains a customer's eSpend number, only the specified daily limit could be taken out of a customer's bank account. If this occurs, PNC says customers aren't liable for the charges. Purchases made with the eSpend card show up separately on bank statements. The account, which is aimed at online-banking customers, also comes with identity-theft reimbursement insurance, a debit card rewards program and no fee for using non-PNC ATMs. The account has a monthly $11 service fee unless customers opt for direct deposit of paychecks or government checks such as Social Security, and pay at least three bills online. The eSpend card comes as debit cards are quickly overtaking cash and checks as preferred methods of payment. According to a report from the American Bankers Association and Boston-based Dove Consulting, 31% of in-store purchases were made with a debit card last year, up from 21% in 1999. Consumers typically have been wary of using debit cards online because, unlike credit cards, they are directly tied to bank accounts. But online use of debit cards is starting to grow. In the first quarter of this year, Visa debit cards were used for 46% of online purchases, up from 43% a year earlier, according to Visa International. Analysts are skeptical about how excited consumers will be about PNC's new card. "I think it's an interesting idea but if you look at consumer usage, consumers are using their debit cards online today in increasing numbers, so it's unclear how much of a demand there would be for a card with that unique application," says Tony Hayes, a Dove analyst. Other banks have long offered similar credit-card products as a way to encourage purchases on the Internet and reduce the amount of fraud they are liable for. In June of 2002, for example, Citigroup Inc.'s Citibank launched free, downloadable software that allows credit-card customers to obtain a new disposable account number each time they make a purchase online. A downside: Such "virtual account numbers" can't be used when a credit card must be shown at pickup. - -- - ----------------- R. A. Hettinga <mailto: rah@ibuc.com> The Internet Bearer Underwriting Corporation <http://www.ibuc.com/> 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire' -----BEGIN PGP SIGNATURE----- Version: 1308 iQA/AwUBQZpi4MPxH8jf3ohaEQKJ3QCfZ+wnHeKvUtcB5OPrDJpowuwZVlcAniqe Y95BEeRcqR2WVUz/2nG4zZvh =wU3/ -----END PGP SIGNATURE-----