Since the new Payment Card Industry (PCI) Data Security Standards, which were enacted back in June, raised the responsibilities of online businesses which accepts credit cards, eWallets are becoming a bit more popular. eWallets protect a customer’s personal and bank information during an online transaction. Instead of paying with your credit card numbers, address and phone - buyers are exchanging their eWallet number. If you are a merchant accepting eWallet payments and not credit card numbers, you will not be burdened with maintaining extra secure records and saving a mountain of private customer card data. PayPal, Amazon.com FPS and Google Checkout are all considered eWallets.
When opening a new eWallet account, the customer must visit that company’s web site, enter their information, regularly return again and again for balances, transactions, statements, transfers etc. As most eWallet users know, all too well, the fraud prevention methods used by these companies are often crazy hoops we all jump must through to prove ‘Mark is really Mark’.
Additionally, eWallet accounts are independent of your current banking relationship and not interlinked with of any existing online banking account. If you already use Bank of America online banking to pay your bills, you would be opening up another account to accept Google Checkout. One more step!
In order to handle more than a few dollars a month, eWallets usually require both your credit card and bank account information. However, the connection between the eWallet and your bank account is not a direct real time connection. As an example, deposits from PayPal to your local bank can be done electronically but require few days of deposit time. If you need funds moved from PayPal to your bank and its a Thursday, good luck clearing that deposit before early the following week. Finally, while these eWallets are super convenient, their fees and transaction costs can add up and be substantial for any online business.
Secure Vault Payments
Its been said, ‘build a better mouse trap and the world will beat a path to your door’. Well, here comes that sophisticated new type of online payment from NACHA and the name to remember is ‘Secure Vault Payments’. When using, this new payment system, online customers do not have to set up any additional third party accounts, fees are lower, transfers are faster and clients can also pay online bills from the same account. Secure Vault Payments is anticipated to be operating sometime in the first quarter of 2008.
How does it work? This is a new Internet payments system which uses the Automated Clearing House (ACH) Network Authorization*1 for the payment allows customers to make their authorization from within the customer’s online banking account. (very secure) After authoring the payment, customers are directed back to the original merchant web site. The funds are then removed from the account.
Just as an eWallet works, this new type of ‘Vault’ payment limits a merchant’s PCI liability. The consumer check out is very convenient and fast plus the merchant has lower fees and a quicker settlement. This is a new secure system for online shopping, fund transfers and bill payment all handled through the customers’ online banking platform.
The system is piloted by NACHA-The Electronic Payments Association. Who is NACHA?
“NACHA represents more than 12,000 financial institutions through direct memberships and a network of regional payments associations, and 650 organizations through its industry councils. NACHA develops operating rules and business practices for the Automated Clearing House (ACH) Network and for electronic payments in the areas of Internet commerce, electronic bill and invoice presentment and payment (EBPP, EIPP), e-checks, financial electronic data interchange (EDI), international payments, and electronic benefits transfer (EBT).” *securevaultpayments.org
Say bu-bye to those third party eWallets, delayed merchant authorization and slow clearing of your funds. With Secure Vault Payments, consumers can make online purchases (shopping), pay bills and transfer funds all from one convenient existing online banking entry point.
Its an extremely safe method of payment, the merchants receive a real time authorization/confirmation and the financial institution authenticates the known customer. Fraud is down and life is good. A 12-18 month pilot program will be starting later this year.
In a parallel to the credit card business, banks that sponsor merchants into the program will pay interchange fees to so-called authenticating banks, the institutions that manage the online-banking programs that verify consumers’ identities. Synovus will be the first authenticating bank in the pilot, with more expected to come on board early next year. NACHA-The Electronic Payments Association, the Herndon, Va.-based rules-setting body for the ACH, expects to release pricing details this month (Digital Transactions News, May 2). Pricing will include switch fees and “governance” fees to NACHA, both of which will be split between authenticating and sponsoring banks.
Synovus’s model presupposes that the bank will also sponsor merchants. As do acquiring institutions in the card business, sponsoring institutions will pass on interchange for Secure Vault Payments transactions to merchants, almost certainly with a markup. Hedges says all of the banking company’s 39 banks will likely participate. *digitaltransactions.net
[Synovus is a holding company for 39 banks.]
1* The ACH Network is a highly reliable and efficient nationwide batch-oriented electronic funds transfer system governed by the NACHA Operating Rules which provide for the interbank clearing of electronic payments for participating depository financial institutions. The ACH Network facilitates commerce electronically by serving as an efficient, reliable and secure payments system.
DigitalMoneyWorld
