Following on the heels of American Express Co., which released a similar product last month, Discover Card last week announced that it now offers customers single-use credit card numbers for online purchases.
Discover's product differs from that offered by New York-based Amex in that it bundles disposable numbers with a digital wallet. The wallet shows a running balance and available credit for the card, and it automatically fills in the user's address and other information.
"We're the first to bring it all together," said Colleen Zambole, vice president of e-commerce at Discover, a unit of New York-based Morgan Stanley Dean Witter & Co. "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. Account numbers and passwords are stored not on the wallet but on the back end of Discover's Web site.
"Since all your information is server-based, it's secure and up-to-date," Zambole said.
But analysts 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 the concept of a digital wallet full of disposable 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 at all. "I think there's no real demand for single-use numbers," said George Barto, an analyst at Gartner Group Inc. in Stamford, Conn. He said 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. As they get more familiar with online shopping, Barto predicted, that fear should dissipate. 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.