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Thursday, May 8, 2008

Removing e-merchants from payment data loop

NACHA – The Electronic Payments Association teamed up with online payment solutions provider eWise Systems USA Inc. to offer the Secure Vault Payments Switch (SVP), which is a new online payment alternative that allows consumers to complete transactions online without sharing financial data or account access.

NACHA selected eWise Systems as the network provider for SVP in the United States after a successful proof of concept phase. "Our company's technology was already live in other countries, so the prior experience was a deciding factor in making eWise the technology provider for SVP in the States," said Richard Brierly-Jones, Executive Vice President of eWise.

SVP allows customers to pay for goods and services online by instructing financial institutions (FIs) to make payments directly to merchants. Unlike traditional online card payments, for which consumers provide card details to merchants, SVP keeps private and sensitive cardholder information within banks or credit unions – beyond merchants' reach.

The technology uses hardware and software that is already employed for online banking authentication, cash management services and the automated clearing house (ACH) network.

Surety of payment

Once consumers place items for purchase into online shopping carts, they select SVP under payment type, which redirects customers to dedicated logon pages at their respective FIs. After authentication of user name, password and funds availability, shoppers select the pay button and are redirected back to the merchant and presented with a receipt and authorization number.

"It's really a push payment, about telling my bank to pay the merchant, keeping personal and account information from merchants and only with the FI, which consumers really like," Brierley-Jones said. "Merchants like it because they are relieved from the business of storing and protecting account data and the bank effects a guarantee of payment.

"The surety of payment is a big factor for merchants. Obviously it reduces chargebacks because the bank or credit union leverages its existing online banking infrastructure to authenticate the consumer initiating the payment. Merchants just want to receive the money and be sure it won't be taken away, which is what SVP does once the transaction has been authorized by the consumer."

Acquiring opportunity

Payment processor Metavante Corp. has integrated its platform with the SVP switch in order to enable FIs to:

  • Authenticate users
  • Present details of transactions to consumers
  • Debit customers' accounts
  • Create ACH origination on behalf of its FI customers

Metavante will provide the online banking systems and technical integration and work with eWise Systems to implement SVP for NACHA. The triadic relationship was formed to create a simple solution for customers and merchants that is cost-effective, fast and registration-free.

SVP can also provide ISOs and MLSs an opportunity to earn increased residual income because the payment alternative has the potential to bring more consumers to the online market.

"This is a great opportunity for the banking industry to take a leadership role in offering new online payment alternatives that leverage all the goodness of the ACH network and provide real business value to participants," said Samantha Carrier, Senior Director for Advanced Payment Solutions at NACHA. "Giving customers the opportunity to transact online without sharing their financial data with anyone but a trusted bank is huge."

Columbus Bank and Trust Co. of Columbus, Ga., a Synovus Financial Corp. bank, was the sponsoring and authorizing bank for the first live transactions originated through consumer purchases at igourmet.com, an online retailer.

"There are 36 other banks and 440 ATMs in the Synovus family throughout Georgia, Alabama, South Carolina, Florida and Tennessee that will be going live between now and the end of May 2008," Carrier said. "This project has been around NACHA for a while and something we've been very interested in testing in the market."

Expanded footprint

NACHA plans to expand the program into Maine next and, ultimately, nationwide. According to Carrier, NACHA's partnerships with organizations like Metavante are essential in terms of a national roll because they are key technology enablers.

"We've built this infrastructure to secure, protect and authenticate our customers," Brierley-Jones said. "More consumers online, in addition to the fact that existing hardware and software processes need not be replaced, creates more revenue generating opportunities for MLSs and ISOs." end of article

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