New security measures being introduced by banks could give online shoppers problems in the run-up to Christmas.
An EU directive – already accepted by Britain – requires banks to introduce more security to protect online shoppers and the system will involve sending passwords to your mobile phone so you can confirm the online transaction.
The directive says that any online shopper spending more than about £27 (€30) in a single transaction will be required to produce extra verification, normally in the form of a password sent by text to your mobile phone.
The process will also apply if you spend more than £90 in total on a particular card or make five separate payments of £27.
But critics say this could cause major problems for anyone who doesn’t have a mobile or lives in an area where reception is patchy.
James Daley of ratings agency Fairer Finance said: “Banks are not yet great at looking after people at the margins – because they’re disabled, or because they live with no mobile coverage. These systems are designed for the 95% – while the remaining 5% are hung out to dry.”
UK Finance, the trade body for British banking, has told its members they need to find an alternative method of verifying a consumer’s identity such as phoning them on their landline or using biometric data on a phone app.
One bank has suggested its customers try an alternative method of payment like PayPal and there is always the option of calling the bank to ask for a one-off approval for a particular transaction.
While banks are already starting to introduce the new system, it won’t become mandatory until next year, but they are already under pressure to get it right.
Retailers don’t want anything to make the online buying process more difficult in the sector of the market which handles up to 70% of all transactions.
The Payment Services Directive, as it is known, is an anti-fraud measure set in place across the EU.
A spokesman for UK Finance said: “These changes are aimed at further enhancing payment security and reducing fraud.”
But he added: “The requirements will include exemptions for low-risk and low-value transactions to help prevent any unnecessary inconvenience for customers.”
Average £292 online spend
New research from Royal Mail shows that Christmas shoppers will be spending an average £292 online over the festive period, with men spending an average £304 and women £271.
The top five purchases are clothes, books, CDs DVDs and computer games, toiletries and makeup and toys. The average gift costs £42 and the average number purchased per person is seven.
Asked why they chose online shopping, 68% said they liked to be able to make their purchases from the comfort of their own home while 63% liked the ability to shop at any time of the day. Ease of comparing prices proved attractive for 48%.
The preferred device for making purchases was a laptop at 59% with 34% preferring to shop using their smartphone.