A Toronto-based startup has drawn support from the world's biggest chip maker for its efforts to allow consumers to simply swipe their credit cards past their computers to make an online purchase.
SecureKey Technologies Inc., which designs software and hardware that let users swipe a credit card or other smart card to authenticate their online shopping and other sensitive Web sessions, is one of six tech companies - and the only Canadian firm - to share $26-million (U.S.) in financing from Intel Corp.'s venture capital arm. The money represents an investment by Intel Capital in the companies.
"When you're online, it's very hard to tell who someone else is," said Greg Wolfond, SecureKey's chairman and chief executive officer. "The question is, how do you make stuff more secure but not make it a real pain to use?"
The SecureKey system, which utilizes new security chips increasingly common in credit and debit cards, consists of hardware that connects to a computer. When a user wants to make a purchase from a participating website, he swipes his credit or debit card past a physical device and enters a password (such as the same password he would use to log into his bank account via the Web). The software then retrieves the user's personal information and immediately completes the website's "checkout" form.
Currently, most e-commerce transactions involve entering a credit card number and a lot of personal information. But there are few ways for retailers to ensure the person entering the data is actually the card holder. Mr. Wolfond said the SecureKey system reduces fraud significantly because a thief needs to know a user's password and have physical access to the person's credit card to make a fraudulent purchase.
SecureKey's business model depends on banks and retailers adopting the device. Mr. Wolfond, who hopes banks will distribute the SecureKey hardware to customers free, said the attraction for consumers is that they don't have to remember multiple passwords for use on separate e-commerce sites, and they can feel secure that no one else is using their credit card online.
For online retailers, the fact that the purchase form is instantly filled out with the user's information increases the likelihood that the transaction will be completed. In online shopping, so-called conversion rates - when a user who visits an e-commerce site ends up purchasing a product - are often less than 5 per cent, and decreases with every additional step a user has to make before the purchase is finalized.
Mr. Wolfond said SecureKey is in talks with several major banks; he hopes the product will be available by year's end. The company is also talking to officials in several provinces about adding chip technology to health cards and other personal identification, with a view to introducing the SecureKey platform to government services.
Intel Capital's interest in SecureKey seems to have been sparked by its mobile applications, which allow users to swipe their credit cards past their mobile phones to make online purchases.
"The investments [in the six companies]… will help [Intel]accelerate plans across a variety of smart devices and market segments," Anand Chandrasekher, Intel's senior vice-president and general manager of its Ultra Mobile Group, said in a statement.