"You do almost the same thing in the USA, only it is automated. We have the patriot act which requires collecting a lot of info-- the US has centralized databases (namely credit reports) that allow easy authentication of people. Outside the USA, they don't have the patriot act, but they have a lot of similar laws, and thus collecting a copy of your passport lets them know you're not an identity thief and lets them satisfy "know your customer" laws in their country."
This is quite possibly one of the oddest things I have read all day, and what, the 5th time the patriot act has come up in this thread? What in the world does the Patriot Act have to do with credit card transaction authorizations? You also seem to imply that credit reports are used to authorize individual card transactions, please provide a citation as I have never heard of this.
Your post very nearly hit on exactly the issue, but was clouded by this first paragraph.
So, let's make it clearer: the reason for asking for a scanned copy of the credit card is to prove the person who made the transaction had a physical copy of the card with an impressed number on it. This is used as a means of reducing the chance of loss in the case of a chargeback as online transactions do not require swiping a card through a POS terminal which normally proves the presence of the card by reading the magnetic stripe[1]. An impression or image of a card is one of the most important means of reducing your liability as a merchant during a chargeback[2]. The scanned copy of the passport is just further validation. We do the exact same for any transaction initiating from a country where we have received a heightened rate of chargebacks from customers based in that country.
Your confusion about the Patriot Act seems to not differentiate the idea of an individual transaction from setting up a transaction account. Perhaps you should read up on that more. The Patriot Act anti-money laundering aspects are not about validating every single transaction through a government database, but about validating the identity of a person requesting to open a new account. [3]
This is quite possibly one of the oddest things I have read all day, and what, the 5th time the patriot act has come up in this thread? What in the world does the Patriot Act have to do with credit card transaction authorizations? You also seem to imply that credit reports are used to authorize individual card transactions, please provide a citation as I have never heard of this.
Your post very nearly hit on exactly the issue, but was clouded by this first paragraph.
So, let's make it clearer: the reason for asking for a scanned copy of the credit card is to prove the person who made the transaction had a physical copy of the card with an impressed number on it. This is used as a means of reducing the chance of loss in the case of a chargeback as online transactions do not require swiping a card through a POS terminal which normally proves the presence of the card by reading the magnetic stripe[1]. An impression or image of a card is one of the most important means of reducing your liability as a merchant during a chargeback[2]. The scanned copy of the passport is just further validation. We do the exact same for any transaction initiating from a country where we have received a heightened rate of chargebacks from customers based in that country.
Your confusion about the Patriot Act seems to not differentiate the idea of an individual transaction from setting up a transaction account. Perhaps you should read up on that more. The Patriot Act anti-money laundering aspects are not about validating every single transaction through a government database, but about validating the identity of a person requesting to open a new account. [3]
[1] http://www.aic.gov.au/documents/B/6/4/%7BB64DD6E5-3B79-4920-... [2] http://www.heartlandpaymentsystems.com/article/Manually-Impr... [3] http://www.fincen.gov/news_room/rp/rulings/html/312factsheet...