Select Committee on European Union Minutes of Evidence

Letter by Mr J R Potts, Chief Executive, Barclaycard

  I promised to let you have information relating to the percentage of applications from Internet merchants that Barclaycard declines. The figure for the period from January to April 2000 is 14 per cent and this compares to around 10 per cent for our non Internet applications. You may remember that in April we launched a new product specifically designed to help new and start up Internet businesses. Although these are early days, we have been able to accept 100 per cent of the applications for "en@ble" received since launch.

  On the subject of fraud statistics, you will recall that I was not able to quote accurate statistics for the simple reason that Internet sales turnover is not yet measured properly in the systems which capture transaction information across the world. However, banks and retailers are changing their systems so that we can capture this information with effect from next year.

  The information I gave was based upon estimates. The industry sales turnover estimate of 2 per cent comes from the Association of Payment and Clearing Services. The estimate of fraud at 1 per cent is based upon our own internal calculation and we believe to be reasonably accurate. I therefore do not wish to change my evidence.

  I do know that experience of fraud losses on the Internet vary greatly.

  We have spoken to Datamonitor who have advised that the figure of £11 million which they quoted was based on a response to a question raised at a banking conference at which Datamonitor was present. I am afraid I do not know the details of the conference but you may wish to pursue this with Datamonitor (Tel No: 0207 316 0001).

  Over time the quality of the data will improve. In the meantime, the important fact that the Sub-Committee may wish to note is that the industry is working towards solutions which will significantly improve security. Barclaycard is playing a leading role in this work.

  Irrespective of the fact that we are currently not experiencing the same levels of fraud as other companies, we nevertheless recognise the need to ensure that there is full confidence in the systems which consumers and businesses use. The Sub-Committee may be assured that we take this responsibility extremely seriously.

23 May 2000

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