Monday, August 9, 2010

Carrot on a Stick

In a move (ostensibly) to protect cardholders from the hazards of online transactions, banks and credit card companies have introduced credit cards devoted solely to online shopping. BPI, for instance, has E-Credit, while BDO has the Virtual Card. Conceptualized as extension cards exclusively for internet use, these cards have sub-credit limits (that may be adjusted per the cardholder’s preference) that reduce the risk exposure of cardholders, they also have identifying numbers which are distinct from that of the main card, thus maintaining the integrity of a cardholder’s account should the online card be compromised.

I have to contend though that having an online card does not at all answer the problems and risks attendant to online transactions. For in truth, the card could just as easily be compromised, the only difference being that there is a segregation between the virtual account and the main account. If at all, online cards provide a false sense of security. In fact, if these cards were to be stripped of all the advertising niceties, a cardholder’s money is just as likely to be stolen, though the amount susceptible to theft is reduced. But even then, it is questionable if a cardholder’s exposure is actually reduced; emboldened by the protection an online card ostensibly gives, cardholders may tend to engage in greater volumes of online transactions (though at lesser amounts at a time owing to the sub-credit limit of the online card). Note too that the sub-credit limit is itself left to the whims of the cardholder, in effect ‘empowering’ the cardholder to choose his own poison as to the amount of risk he is willing to take.

A case could thus be made for the creation of mechanisms that more effectively address the risks of online transactions. But there is an equally, if not more, pressing concern that no amount of technical solutions can address – a shopper’s cravings, or, to put it more bluntly, consumerist avarice. And we can only expect companies to feed the frenzy. So until that complication gets worked out, we can only expect more carrots on sticks – illusory protections that offer no real solutions – to be dangled on our faces.

Entry No. 9

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