Two-factor authentication, which uses physical security devices to generate a single-use password, is being advanced as a way to reduce fraud losses from phishing. It is being used by a growing number of banks in both the US and UK. The token is typically a compact electronic card-like device which displays a number on a small screen. By entering this number into the online system when you login, you prove that that you are in possession of the card.

“At eBay, we’re always looking for additional tools and technologies to improve the security of our community’s accounts and ensure the privacy of information,” said Rob Chesnut, senior vice president of trust and safety for eBay. Two-factor authentication will be another important way customers can shop safely on eBay and pay with PayPal.”

Last week VeriSign bought the Weblogs.com blog pinging service, and is widely reported to have struck a deal to purchase Moreover, an RSS-driven service that syndicates news for third-party sites.