Actually, I more often than not have to verify my online purchases. I have to use my bank's online banking card reader with my card and pin code.

It is not the case for all transactions but for most Swedish online transactions this has been the case for the past few years.

It is called something along the lines of 3-D secure/Verified by Visa

I've seen those :

- additional verification code sent by SMS (France), see http://en.wikipedia.org/wiki/3-D_Secure

- bank provided card reader used with the card and pin code (Belgium)

Most online card transactions in the UK use a system called verified by visa (or it's MasterCard equivalent), which shows you a phrase you previously specified (to prove it is legitimate) then asks you to enter 3 characters of your password.

That is true, I was referring solely to Target where it was physical transactions. There are other solutions that can be implemented for card not present transactions.