PayPal Inc. is offering secure key technology through an electronic token that generates a unique security code approximately every 30 seconds. Members can use this code, along with their user name and password, to sign into both their eBay Inc. and PayPal accounts, all in the name of preventing unauthorized access.
Called the PayPal Security Key, the technology uses two-factor authentication to protect consumers and reduce losses from online fraud such as phishing attacks. The key carries a one-time fee of $5 for PayPal and eBay account holders in the U.S. The technology soon also will be available in Germany and Australia, PayPal says, with more countries to follow.
“We’ve had a tremendously positive response to the PayPal security key beta program and are excited to make the device generally available,” says Michael Barrett, chief information security officer at PayPal, which is a subsidiary of eBay. “While PayPal.com remains a trusted and secure environment, the PayPal security key allows customers to take their privacy and security into their own hands to help protect their eBay and PayPal accounts against unauthorized access.”
A PayPal spokesman declined to be specific about token adoption rates thus far, but notes users number in the “tens of thousands.”
When PayPal acquired VeriSign Inc.’s payment gateway in late 2005, it agreed to distribute 1 million tokens to its customers beginning in 2006. Beta testing actually began in February 2007 and it has been well received, PayPal says.
Security issues are driving acceptance, and PayPal won’t lose money on the tokens because prices have been falling in recent years, Avivah Litan, a senior analyst at Gartner Inc., told Internet Retailer. “I was skeptical of the VeriSign payment gateway acquisition at first, but PayPal has gotten more enthusiastic about the tokens because security problems have gone from bad to worse. The tokens are selling pretty much at cost, so at least they will break even,” she adds.
Token technology has not been tried much for online shopping, but didn’t fare well among the general population when AOL tried it some years ago, Litan says. “AOL tried, but didn’t market the technology and it failed,” she says. “PayPal is really the first mass consumer payment provider to offer the technology.”
Litan predicts younger PayPal and eBay customers will adopt the security key technology sooner than the average credit card customer. “From a pure voluntary adoption standpoint, they will probably get up to 10% of their user base on board,” she adds.
The security key is part of the VeriSign Identity Protection Network. Consumers in the network can use the key to protect themselves on a variety of financial services and e-commerce web sites.
PayPal has promoted the security key option to members on its web site since early this year. To date, the only other means of promotion has been via word of mouth, the spokesman says. News of the program might be included in future member e-mails, he adds.
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