How Capital One wants to make online shopping safer

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Capital One unveiled a new security feature at SXSW on March 9 designed to remove some of the inevitable hassle that comes with using plastic credit cards, and help retailers cut down on potential fraud issues.

A Google Chrome plug-in that keeps customers connected with Eno, the bank’s digital assistant, now creates “virtual numbers” in real time so customers don’t have to enter their actual credit card information at checkout. Eno detects merchant checkout pages and automatically serves up the virtual card — completely different 16-digit credit card numbers, three-digit security codes and expiration dates — and customers decide whether to use, save or dismiss it. The bank plans to make the feature available on all browsers eventually, said Tom Poole, svp of digital payments and identity at Capital One.

Capital One designed Eno virtual numbers to give customers “the ability to set rules about how you want payments to be treated,” Poole said. “You can tell us that. Today, we give you one number on a plastic card, and there are no rules around it — it’s usable for anything, and if you give it to someone, you give access to your entire credit line definitionally.”

Virtual cards are unique for the users’ different merchant relationships, and customers can store a portfolio of the different numbers, with the option to block a card from making unauthorized charges or delete relationships they no longer care to keep. The feature should help customers avoid fraud, which made up 1.58 percent of retailers’ revenues as of December, compared to 1.47 percent the year before. If an online retailer suffers a data breach and a customer’s virtual card number is compromised, their data remains safe because they never handed over their real card information in the first place.

But company executives maintain the feature, a form of tokenization, is a play on hassle, rather than fraud, the loop background music of payments innovation.

People store their true credit card information everywhere — Amazon, Spotify, phone carriers, gym memberships — and are bound to replace their credit card numbers at every website when they get a new card, which could be for a variety of reasons, whether they lost a card or replaced an expired one. When the bank issues customers new credit cards, Eno maps all of their virtual relationships saved in their portfolio of virtual numbers to the new card information, so it’s automatically updated without the customer having to do it manually.

Looking beyond security and fraud, Eno virtual numbers could be a small but significant card abandonment play that helps online retailers and validates the notion that banks make natural partners for them, rather than compete with them. Capital One already has a credit card relationship with Amazon, for example, and is in talks with the e-commerce giant about partnering on Amazon customer checking accounts.

The rate of cart abandonment was 69.2 percent in 2017, a 16 percent increase over the last 11 years. Among the many contributors, 18 percent of shoppers didn’t make it through the checkout process because they didn’t trust the site with their credit card information, according to a 2017 Baymard Institute study, but another 28 percent said the checkout process was too long or complicated, and 37 percent dreaded having to create an account in order to move forward.

“Security is great, but if it’s not convenient, you’re not doing it,” Poole said. “Here, it just pops up, the convenience factor is so high customers can stay on their couch. … A lot of people told us they abandon shopping because they don’t feel like getting up to find their payment card.”

Ubiquity is key to that convenience, though. Poole said there are many good existing solutions — some of which come from Capital One’s retail “partners” — but they are only present on some websites.

“Making sure you didn’t have to work for any of that benefit was important” during the yearlong development process, he said. “If it’s not everywhere, customers stop using it, our experience tells us. Nobody shops at certain places just because there’s a certain checkout button on that site — that’s a convenience you discover after you’ve already decided you want to shop there. We’re not asking you to remember that we offer a service like this.”

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