BANK card chip-and-pin pioneer Dr David Lanc claims to have developed a product that will eliminate card fraud.
His company, Payfont, has raised £350,000 from private investors to develop a secure interface that will use a range of tools including biometric voice recognition to stop users from being targeted by identity fraudsters.
The company, chaired by former Ivory & Sime and F&C director Ian Paterson Brown, says it is set to secure a “strategic partner” with a major high-street bank or other online payment company within months.
Paterson Brown, who expects the company to break the US market in 2014, said: “The figures we are quoting are very much the tip of the iceberg.
“We will initially concentrate on supporting the UK banking sector, as e-commerce is a significant consumer market here, but Payfont is designed to work worldwide and we would look to roll out globally over the next few years.”
UK card fraud recorded by banks hit £341 million in 2011 and rose by 9 per cent for the first six months of this year, with online banking fraud up 28 per cent over the same period.
The product, which fits in with banks’ existing transaction processes, can be used by customers via their PCs, mobiles and tablets.
Lanc, who was a director of cards strategy and development at Royal Bank of Scotland, has been developing the project since he left the bank to take a PhD in business information systems strategy alignment at Edinburgh’s Heriot-Watt University in 2006.
He admits that interest in the product among investors waned after the 2008 banking crash, but that online fraud and identify theft has escalated in the meantime.
One of the Payfont functions will prevent the storage of users’ card details on retailers’ websites while giving banks, consumers and retailers “complete transparency” on online purchases in a way the company claims is a “global first”.
“Criminals rely on standard methods where the online consumer provides identity and financial details in a predictable manner, and merchants are just as vulnerable to loss of goods without being paid,” said Lanc.
“Payfont completely changes the predictability of the process, safeguarding the consumer and the merchant. We believe this is a product whose time has come.”
The company raised initial funding at the start of the year from 20 investors and the prototype was ready for demonstration to potential customers and other investors last month.
At the same time, the Payfont product, which is designed to be used by banks alongside existing transaction processes, would prevent losses to retailers as customers abandon potential online sales due to onerous security checks.
Lanc said: “Research published in April estimated that over £1 billion worth of e-commerce transactions in 2011 were abandoned because consumers are reported to be fed up of complex security that doesn’t rid their fear of identity theft.”