Following on the heels of American Express Co., which released a similar product last month , Discover Card now offers customers single-use credit-card numbers for online purchases.
Discover's product differs from that offered by American Express in that it bundles disposable numbers with a digital wallet that shows a running balance and available credit for the card, and it automatically fills in the user's address and other information.
"Those components exist out there as separate pieces," said Colleen Zambole, vice president of electronic commerce at Discover, a Morgan Stanley Dean Witter company. "We're the first to bring it all together. It just pops up, asks if you want help filling in forms, and generates a surrogate account number."
Discover's disposable card numbers also differ from Amex's in that they don't expire and can be used by a single merchant for recurring charges -- such as monthly Internet connection fees.
The service works like this: Customers download the Deskshop application from the Discover Web site. Unlike other digital wallets, no account numbers or passwords are stored on the wallet itself -- the application refers back to Discover's Web site for all account details.
"Since all your information is server-based, it's secure and up-to-date," Zambole said.
Analysts, however, said they don't see the move as a major step forward in terms of either security or user interface design.
"Maybe there would be a little bit of benefit from it, but not a huge benefit," said Frank Prince, an analyst at Forrester Research Inc. in Cambridge, Mass. He added that if a digital wallet full of disposal card numbers did catch on with customers, it would be relatively straightforward for other credit-card companies to offer their own versions. "I don't see that as being a competitive edge that would last too long."
Some analysts questioned the need for disposable credit cards.
"I think there's no real demand for single-use numbers," said George Barto, an analyst at Gartner Group Inc. in Stamford, Conn. According to Barto, online security concerns actually affect merchants who are liable for fraud, not consumers.
Shoppers have an unrealistic sense of how unsafe e-commerce is, he said. "It's basically a fear of the unknown."
As they get more familiar with online shopping, Barto predicted, that fear should dissipate -- just as people have become comfortable with giving their credit cards to wait staff at restaurants and giving their numbers over the telephone to catalog companies.
In addition, Barto said, disposable numbers can be klutzy and add extra steps to the shopping process. "It's not what consumers really want," he said.