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Cyota.com Preventing muggings in the online mall. From the September 2000 issue One of the biggest disincentives
to shopping online is the fear that someone will swipe your credit
card number and head off to the malls. Enter Cyota.com . This Israeli
startup, founded by four veterans of elite intelligence units in
the Israeli Defense Force, is determined to build consumer confidence
in e-tailing.
Its SecureClick software, to be sold to credit card companies,
will allow card issuers to create one-time transaction codes. To
the merchant these look like credit card numbers, but they don't
reveal crucial information to an online snooper.
A customer downloads the SecureClick plug-in from her credit card
company, through a cobranded partnership. When the customer purchases
an item at a site and types her credit card number, SecureClick
inserts a bogus number in its place. This stand-in number goes to
the merchant, who sends it along to the card issuer to be paid.
The SecureClick server then intercepts the number, verifies the
validity of the purchase, and sends the correct credit card number
to the issuer.
The cardholder's true credit card number is never revealed to the
merchant. As long as the cardholder uses the same credit card, a
secure transaction is guaranteed. And a consumer using the same
credit card is good news for card companies, who pay Cyota for the
SecureClick server system in addition to paying a percentage of
each transaction. The brilliance of the system lies in the relationship
between the consumer and the card company.
Because most competing schemes, like Digicash, and CyberCash (Nasdaq:
CYCH), depend on the consumer's interaction with the merchant, the
ability to shop at sites is limited by the number of merchants that
adopt the technology. With Cyota, a consumer who downloads the plug-in
can shop at any site and be guaranteed security. When Naftali Bennett,
Lior Golan, Michal Tsur, and Ben Enosh came together with a security
system in mind, they were nothing close to credit card experts.
But Ms. Tsur, now the executive vice president of U.S. operations,
was getting her Ph.D. at the time at New York University's Ph.D.
law program. She enrolled in a class focusing on credit cards, checks,
and commercial transactions.
Twice a week she arrived to quiz the professor, armed with an
arsenal of questions. When the professor didn't laugh the team's
idea out of the room, they decided to get serious. With the help
of Israel Seed Partners , which pumped $1.2 million into its first
round, Cyota quickly corralled some key strategic alliances in the
credit card security field.
"Today, five of the nine people we met with early on are either
on the board or are advisers to the company," says Mr. Enosh. The
list includes Adi Shamir, the coinventor of the RSA encryption method,
and Ira Rimerman, former president of Citibank credit cards worldwide.
While the company is very young and the entrepreneurs rather inexperienced,
the quality of Cyota's system stands on its own. CTO Lior Golan
is a minor celebrity in Israel, having won the Israeli Defense Award
for his security work with the Ministry of Defense.
Gary Heatherington, former CEO of Bank One in Canada, recently
signed on as Cyota's new leader. With a strong board of directors
and a business model that generates real revenue, Cyota is positioned
to succeed.
AT A GLANCE
CEO Gary Heatherington |
