American Express Offers Safer Online Shopping

American Express has announced a new service to protect the personal privacy of its cardholders. In a full-page advertisement in the New York Times it announced a "new way for Cardmembers to shop online using a random unique number for each purchase they make. It's a safer way to shop because the actual card number is not sent out over the Internet, helping Cardmembers keep their private information private. The service is free." In addition, the same advertisement announced that the company would soon allow cardholders to choose how much information is available about them when they are simply surfing the Net, from their full identity to anonymity.

The first program, called Private Payments, will be rolled out this fall. Designed to ease customer fears about the security of online transmittal of credit card numbers, the program essentially provides members with a disposable "transaction number" each time they wish to make a purchase over the Internet. The transaction number is transmitted online instead of the member's account number, authorizes a single purchase and can't be re-used. The transaction number which the merchant reports to American Express results in the appropriate charge to the cardmember's account.

Private Payments is the latest in a series of products which American Express has launched to capitalize on perceived customer demand for privacy protections. Last fall the company rolled out its Blue card, which contains both the traditional magnetic stripe as well as a chip that transmits information about cardholder characteristics and preferences. The company has touted the chip feature as a means of safeguarding the privacy of online transaction information. About two million Blue cards were in circulation as of the end of the second quarter, according to the American Banker.