'Umbrella' Payment System Ready to Roll in Belgium

Belgium has a new e-commerce payment method that, if exported, could solve some of the payment problems for both merchants and users of Internet casinos.

Banksys, the Belgian bank that all banks in that country are united under for secure payment services, this spring introduced a service called banxafe. It allows for Internet transactions to take place with no exchange of credit card numbers between purchaser and merchant.

If implemented in a country where Internet gambling is legal--and it isn't in Belgium--a product like banxafe would enable online gamblers to shield their credit card numbers from Internet gambling outlets they might not trust with their account information. Online wagering merchants, in turn, would be able to shed some of the risk of repudiation that they take on when processing a transaction where the credit card isn't actually presented.

"The situation in Belgium is that the banks are much more cautious than United States banks are for payments," said Bernard van der Lande, the Internet and mobile manager for Banksys. "And the problem with payments on the Internet is that we are in a mode where the card is not presented; you are just providing the credit card numbers. By doing so the merchants are taking all the risk of repudiation.

"Banxafe is a level of security; it's an umbrella on the normal payment methods, which are credit cards or debit cards."

Anyone with a Visa, Eurocard-MasterCard or national debit card in Belgium can set up an electronic wallet on a server maintained by Banksys. In the electronic wallet are virtual versions of all the person's cards.

According to van der Lande, the banxafe method can be used for all types of transactions--purchases made by Internet, telephone or face-to-face. On the Internet, to make a secure payment using banxafe, the person either needs a card reader attached to his or her PC or a GSM (Global System for Mobile Communications) phone with a special chip card. PCs with a card reader have the same type of chip card.

In online transactions, the user is asked what payment method he or she would like to choose. If the person chooses banxafe, he or she can pay with any of the credit or debit cards stored in the virtual wallet. Once he or she has selected a credit card with which to make the purchase, the authentication process begins. That is where the security of the payment mechanism kicks in.

"When you are using the banxafe payment you never have to provide to the merchant the credit card number," van der Lande said. "We never give to the merchant the credit card number. So what is given to the merchant is certificates that the merchant will send to the acquiring banks in order to proceed the payments. So the two problems of security of classical payments on the Internet are solved."

During the authentication process, the user either slides his or her card through the reader and then types a code on the keyboard or types the same code on a mobile phone. If the code is correct, the merchant is paid by an electronic certificate that does not bear the credit card number.

Van der Lande said the process not only ensures protection for the shopper, but it prevents people from using fake or stolen credit card numbers to make purchases via Internet or phone.

"The problem, when you don't use a banxafe payment but provide your credit-card number, is that maybe the card is not yours," he said.

Banxafe was launched this spring, but van der Lande said Banksys is waiting until February 2002 to promote it. He said the company has a partnership with Packard Bell to install the card readers as part of the Internet access bundle included with new computers in Belgium. He said the readers have already been installed on about 60,000 computers, and about half of the owners of those computers have used banxafe. The card readers can also be used for Web banking. The goal, he said, is to reach 150,000 users by the end of the year. The GSM authentication method will be operational in May of 2002.

Banksys has agreements with some of the mobile operators in Belgium to install the banxafe authentication application in new phones, so that banxafe users who don't have a card reader in their PC can still use the system.

So far, van der Lande said, 60 of the 200 big Internet merchants in Belgium have signed on to be banxafe merchants. Twenty such businesses have had the program installed.

He said that the method would be quite suitable for Internet gambling because of the high number of repudiated charges that occur among online wagering transactions.

Van der Lande said that Banksys is currently looking at exporting the technology. France and the Netherlands use similar card readers but have their own systems, he said.

"We want to show the world that it's possible to make secure Internet payments," he said.