Discover Card Doesn’t Get It

The folks at Discover Card just announced that they are ending their Secure Online Account Number program. It was a fraud prevention system that allowed a cardholder to generate a different credit card number for each merchant. The card number was bound to the merchant with whom it was first used—any attempt to use the same number elsewhere would be rejected. It was different from some other virtual credit card systems in that it did not let you specify a dollar limit or an explicit expiration date. Despite those limitations, it gave me a fair bit of peace of mind.

In explaining their decision, Discover says

Since Secure Online Account Numbers launched over a decade ago, we’ve continued to add layers of fraud detection and prevention, authentication and ID verification to protect your account information.

and

Discover provides you $0 Fraud Liability Guarantee to protect your account from unauthorized charges.

The problem with that $0 guarantee is that it ignores a fundamental truth of the modern world: time is money. Because what happens if Discover discovers that someone who shouldn’t has hold of your account number is they cancel the card and issue a new account number. No problem, right?

Some years ago, I was traveling for work when my wife’s purse was stolen. The only credit card I had with me was also in the stolen purse, so the card had to be canceled. This created an unexpected problem when the hotel I was staying at demanded an alternate form of payment immediately: they would not wait for a new card to be delivered to me, which might not even arrive before my departure. I had to get a colleague to guarantee my room payment.

I’ve learned that lesson, and my wife and I each carry a card that the other doesn’t. But canceling a credit card can still have a substantial impact. The last time Discover decided to change my account number, I got a notice from the local public radio station that my monthly pledge was rejected. Various online accounts had to be updated. It took a while to track everything down and get everything sorted.

That’s why I have been a regular user of the virtual account feature: not to limit my financial risk, but to limit my non-financial risk. And that is what Discover Card does not seem to understand.

Update (2011-10-17): Discover just announced that they have changed their minds:

We recently announced the decision to discontinue the Secure Online Account Number feature.

Since then, we've heard customers like you tell us how much they love the added control of using Secure Online Account Numbers for their online purchases.

Based on the feedback we've decided to reinstate this feature. Beginning today you will once again be able to generate secure online account numbers for online purchases.

Somebody actually listened.