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NETELLER - Privacy and security design flaw

Yesterday, colleague of mine brought to my notice about a payment system called NETELLER and it's merchant API named NETELLER Direct API V4.

This NETELLER Direct API V4, helps the merchant to collect amount from users. It's simple--same just like early Authorize.net, along with the required amount you collect the user's id and password and post them to their API URL and they'll send you back with success or error codes in XML format.

The major problem with these types of system is security and privacy--you lose both as you're forced to type your username and password in alien web page. If I remember right, this is was the case with Authorize.net and they changed their design to something like PayPal. The PayPal design is somewhat better as you never type or forced to type your username and password in other alien web pages.

The alien merchant web page uses NETELLER Direct API V4 is forced to get user's NETELLER account and password. I'm much sure that the alien website will obviously store such info--but what if they tried to access user's NETELLER account?

The funniest part of this NETELLER design is that they call it more secure and in their security page they advice "Never share your NETELLER Password or Secure ID with anyone. You will never be asked to disclose your password or Secure ID by a NETELLER representative or anyone affiliated with NETELLER."

Beware of NETTELLER!--until they fix their design flaw.

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