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Microsoft And VISA, a Recipe For Disaster? 10 July 2002 Edition
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Millions of dollars worth of online transactions are processed every day by merchants who accept credit card payments through their websites. The majority of those transactions involve a VISA card.

There has always been a degree of risk in using your credit card online, but in most cases those risks are very small -- often limited to just $50 or so in the event of a fraud. The real cost however, is the hassle involved in cancelling a compromised card and getting a new one issued.

Of course merchants and the banks have been searching long and hard for a solution to the problem of online credit card fraud with all sorts of complex and cumbersome solutions having been touted. We've got technology-based systems such as ANZ's ZED card which require the use of a special card-reader, and alternative proposals have included things such as digital signatures and other tactics.

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The fact that most Net users still just type in their card number and hit enter is a clear indication that none of these existing authentication methods have been widely accepted by the merchants, the banks or their customers.

But now it seems that Microsoft is planning to offer an authentication service to help protect VISA card transactions -- and it's going to do it through its Passport service.

Oh dear -- do I hear alarm bells ringing?

Does this mean that we're all going to have to get a Microsoft Passport account before we can buy stuff online? I sure hope not.

Even more worrying however is the fact that card users would then be reliant on Microsoft to protect the security of their online transactions. I know that I for one simply don't trust Bill's "Trustworthy Computing" initiative enough to let it anywhere near my credit card.

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    Now I suspect (please correct me if I'm wrong) that there are an awful lot of other savvy Net users who would feel the same way.

    If VISA isn't very careful, they could be shooting themselves in the foot in a most painful manner.

    You don't have to be too smart to work out that having a finger in every online transaction has long been the goal of Microsoft. They know that if they were able to skim just a couple of cents off every sale made online then their software revenues would pale into insignificance by comparison.

    An already huge company would become truly humongous in terms of its wealth and power.

    I suspect that the only way this could be avoided is if people are prepared to say "keep Billie's boys out of my online business" and refuse to sign up for a Passport account or use one as the authentication mechanism for online purchases.

    Is Microsoft really prepared for the inevitable tidal-wave of hacker attacks that would be launched if it was known that cracking Passport accounts could yield a huge financial bounty for those who were successful?

    I doubt it very much.

    Let's hope people take a close look at what could be about to happen here before they leap in boots and all.

    The security of the Passport service has been broken before and it will be broken again.

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