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NEWS RELEASE
CONTACTS:
Michael Herd (media
only)
mherd@nacha.org |
Samantha Carrier
scarrier@nacha.org |
NACHA to Test Bank-Provided Online Authentication
and Private Payments
Herndon, Virginia, March 15, 2006 -
NACHA - The Electronic Payments Association will
organize a pilot to test online transactions in
which consumers would be authenticated by their own
financial institutions, and initiate private, secure
electronic payments via their financial
institutions' online banking web sites. NACHA's
Board of Directors recently approved the test for
consumers' online funds transfers, bill payments,
and purchases.
"Research continues to show that privacy and
security are the primary concerns of consumers that
do not conduct transactions on the Internet," said
Elliott C. McEntee, President and Chief Executive
Officer of NACHA. "By enabling financial information
to remain private between these consumers and their
financial institutions, whole new markets of
consumer transactions could be conducted online."
"As a result of the recent FFIEC guidance on
authentication, financial institutions will be
making their ability to authenticate their customers
online more robust," said Rick Burke, Vice Chairman
of NACHA's Board of Directors, and Senior Vice
President of Commerce Bank in Cherry Hill, New
Jersey. "The NACHA Board decided that the time is
right to look at this capability as a business
opportunity instead of just as an additional
expense."
In the pilot, a consumer would choose to complete an
online transaction at a web site using this
authentication and payment method. The consumer
would then be re-directed via a secure network to
her financial institution's online banking web site,
where she would log in using existing log-in
procedures. Once securely within the financial
institution's web site, the consumer would confirm
the details of the transaction and authorize
payment.
Because the consumer would authorize payment via her
own financial institution, she does not provide her
financial account information to the business or a
third-party; it remains private between her and her
financial institution. Because the business does not
receive and store her financial account information,
it does not have the responsibility of securing the
information from mishandling, misuse or theft.
"Financial institutions have already invested
heavily in secure online banking systems," said
Charles Bretz, a Director on NACHA's Board, and
Senior Vice President of Compass Bank. "NACHA's
pilot constitutes a modest investment in networking
these systems, so that financial institutions can
leverage their investments into new products and
services."
NACHA's objectives in organizing the pilot are to:
1) evaluate the potential markets of new online
transactions enabled by the privacy and other
features; 2) evaluate the structure and level of
fees that would best result in adoption by all
participant categories; and, 3) determine the costs,
benefits and net economic impact to participants.
The pilot comes on the heels of a successful
proof-of-concept phase, which demonstrated that the
process for a round-trip transaction works well and
quickly, and that users found it easy to use. The
network provider for the proof-of-concept, eWise
Systems, will also serve as the network provider for
the pilot test.
"The proof-of-concept phase showed us that financial
institutions can play the central role in new online
authentication and payment solutions," said Arthur
Markos, a NACHA Director and President of Gardiner
Savings Institution, which was part of
proof-of-concept team. "Gardiner's customers already
trust us. We want to explore how that existing trust
can enable our customers to conduct more of their
business online."
In addition to organizing the pilot, NACHA will also
be developing business cases for bank-provided
online authentication and payments in the
business-to-business market, and for bank-provided
online authentication as a stand-alone service.
NACHA will be accepting businesses, government
agencies, and financial institutions to participate
in the pilot. Parties interested in participating
may contact Samantha Carrier of NACHA at
scarrier@nacha.org. NACHA will also host an
industry Town Hall teleconference on April 10.
Registration information will be posted on
www.nacha.org.
NACHA is also hosting an industry conference on
financial institutions' business opportunities
inherent in the recent FFIEC guidance on
multi-factor authentication. The conference -
Authentication Mandate: Compliance Issues & Revenue
Opportunities for Online Banking - will be held June
6-7, 2006 in Reston, Virginia. Conference details
are available at
http://www.nacha.org/conferences/AuthMandate_2006/default.htm.
About NACHA - The
Electronic Payments Association
NACHA is the leading
organization in developing electronic solutions to
improve the payments system. NACHA represents more
than 11,000 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). Visit NACHA on the Internet
at www.nacha.org.
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