Littlewoods Europe's addition of Neteller's e-wallet as an accepted payment method will help protect customers against card-not-present fraud because they will not have to enter financial or personal information when making an online purchase, the U.K. online retailer said.
Littlewoods Europe, which is part of Shop Direct Home Shopping Ltd. of the U.K., also accepts credit and debit cards and PayPal payments.
Optimal Payments PLC's Neteller e-wallet is a free virtual payment account that allows consumers to shop online without revealing personal or financial information during checkout.
The deal was announced March 15.
The e-wallet is an online payment account similar to a bank account, but is specifically designed for online spending, Dan Starr, Optimal Payments executive vice president and chief marketing officer, said in an interview. Consumers also may use the wallet to transfer funds to other individuals, Starr said.
The e-wallet also is not U.K.-specific, so consumers in other countries may sign up. That means many consumers who shop on international sites do not have to worry about whether the merchant will accept their local payment card, Starr said.
Consumers sign up and register for a free account on the Neteller website, and may put funds into the wallet account using a credit or debit card or by linking it directly to a bank account, Starr said. They then click the Neteller option when asked for their payment method, he said.
Consumers complete the purchase by entering their Neteller account number, Starr said.
The e-wallet also includes a physical MasterCard-branded prepaid card that links to the e-wallet account as well as a virtual MasterCard, Starr said.
The virtual MasterCard generates a single-use card number each time a consumer makes a purchase online, and shoppers may use it when an online merchant does not accept Neteller account payments. Consumers may use the prepaid card at physical retail stores wherever MasterCard is accepted.
The e-wallet is free for consumers, but merchants pay "a couple of cents plus 3.9% of the sale to Optimal Payments," Starr said. If consumers use the virtual or prepaid MasterCard, merchants pay the same fees they normally do with card payments, he said.
"Virtual wallets can certainly help prevent data breaches, but if a consumer's concern is more a malware type of attack, then the wallet is not very safe," said Julie Conroy McNelley, an analyst at Aite Group LLC of Boston.
The most interesting aspect of the Neteller e-wallet is the virtual MasterCard component, which is very secure, McNelley said.
"If a consumer is concerned about security, then the virtual MasterCard will protect them and is an attractive benefit," she said.
But while virtual wallets may help protect consumers against fraud, companies such as Optimal Payments may find it challenging to gain consumer adoption, McNelley said.
