In my mind, however, the main culprit -- the most obvious one -- is the fact that most transactions are not associating the identity of the user with the card or account being presented.
In reality, when you present a card to make a purchase in the physical world, the vendor taking the card is supposed to validate your identity and ensure you are the real owner of that particular account.
But online, we've basically skipped over that user/client authentication part. We no longer have a way to authenticate the card holder as the real owner of the card, and much of the online fraud is a result of that simple fact.
This issue was something SSL tried to address early on, but SSL's approach to the issue didn't get implemented the way it was intended.
Later on, the credit card associations started an effort called 3D Secure in an attempt to occasionally authenticate the user while they performed a transaction. (If you've ever been asked to type a password after you present a card during a transaction, you've experienced this yourself.) Successfully providing the password assures that, at one point, you actually registered the card. There are at least a few good companies that still support this concept today.
Unfortunately, the implementation of this concept (i.e., interrupting the user's purchase by forwarding them to a separate site and asking them to provide a password that they've very likely forgotten) has resulted in a lot of lost revenue.
My feeling is that it's going to be difficult, now that we're 15 or 16 years into the history of e-commerce, to actually rebuild the original authentication ideas.
Perhaps the correct implementation is to try to infer the identity of the card presenter through the environment where this transaction is coming from, to make sure that this is the correct card holder, and to not bother the user at the same time. If you can validate that the environment of the user presenting the card looks like the environment inhabited by the card before, it's reasonable to assume that this is very likely the same user. We can complement that with a protocol for registering the cards for e-commerce, similar to how we register a new credit card on the phone today when we get one in the mail.
Because the incidence of fraud is so high and we're losing revenue due to people escaping from this secondary authentication step, I expect the industry to actually take a new angle on this. We are probably not going to go back and try to build the original SSL dream of authenticating everybody in the world and having everybody known to any merchant that they try to go to, but I expect that we will, somehow, create an equally effective authentication scheme in the future.
Recognized in the industry as the "inventor of SSL," Dr. Taher Elgamal led the SSL efforts at Netscape. He also wrote the SSL patent and promoted SSL as the Internet security standard within standard committees and the industry. Dr. Elgamal invented several industry and government standards in data security and digital signatures area, including the DSS government standard for digital signatures. In addition to serving on numerous corporate advisory boards, Dr. Elgamal is the Chief Security Officer at Axway, a global provider of multi-enterprise solutions and infrastructure. He holds a Ph.D. and M.S. in Computer Science from Stanford University. View more of his blog posts here.