E-Trade Group, the on-line investment broker, is extending payment services to clients through an alliance with National Processing Co. of Louisville, Ky.
E-Trade is accepting transactions using the National City Corp. processing subsidiary's VirtualPay Internet funds transfer system.
As an alternative to checks or wire transfers, VirtualPay enables E- Trade clients to move $1,000 to $10,000 a day from their personal checking accounts into on-line trading accounts. The service is free to E-Trade customers and provides them with transaction receipts.
"Right now we believe we are the only on-line investing service that offers cash transfers and payment over the Internet," said Karl Sammons, senior vice president of electronic commerce, NPC Corporate Services.
This alliance "is significant in terms of providing a new way for our customers to fund their accounts," said Pam Kramer, vice president for product development and product marketing at E-Trade. "We believe we are the first to request to do this via the automated clearing house on the Web."
E-Trade requires customers to complete an authorization form for each account to be linked to the company. After sending in the form and a voided check, the customer should be able to start using the cash transfer service within a week.
VirtualPay confirms a customer's transfer request instantly and interacts with the commercial banking system to debit the money electronically from the customer's checking account and credit it to the appropriate E-Trade account.
"We use ACH on demand," said David Greene, E-Trade's senior product manager of cash management and mutual funds. "But we hope eventually to have recurring ACH and expand it to include credit cards or bill payments. We may also augment the authorization process with digital certificates from Verisign."
National Processing completes 400 million remittance transactions a year. Since first offering VirtualPay in November, it has been processing thousands of payments a month through the Internet for Mobil Oil and First USA. Credit card customers can sign onto these Web sites and pay their bills on-line.
"VirtualPay is free to the consumer and requires no pre-funding," said Mr. Sammons. "The merchant who accepts the payment pays NPC a fee for processing." That amount is determined on a company-by-company basis and according to the complexity of the payment.
"We are targeting more companies in all kinds of businesses," said Mr. Sammons. "Specifically, anyone who receives lots of payments by mail or check today can use VirtualPay and offer it to their customers."
Since the system went live Aug. 1, Mr. Sammons said, National Processing has seen a significant increase in inquiries about VirtualPay.
E-Trade has a number of relationships with banks. For lockbox processing it relies on Wells Fargo & Co. on the West Coast and State Street Corp. on the East Coast. For depository services it uses Citibank and for direct deposits Bank of New York Co.
E-Trade has been on the Internet since February 1996 and now does 60% of its trading via the Web.
