Nacha, the electronic payments association, is expanding significantly a test of its system for using the automated clearing house network to pay for online purchases.
The Herndon, Va., clearing house group said Monday that Fidelity National Information Services Inc. will offer the Nacha Secure Vault Payments system to its 9,000 financial institution customers. Fidelity has agreed to offer the system to clients that use its e-payment platform and to financial institutions that do not have a relationship with the vendor.
George Throckmorton, Nacha's senior director of payment solution technology, said in an interview Monday that Fidelity likely will have its first banks live on the system this year.
"Fidelity is a company with vision, and they believe in the Secure Vault Payments concept," Mr. Throckmorton said. Its participation will "help us gain some mass and learn some things."
He compared Fidelity's role to that of Metavante Technologies Inc., which said in March that it would process transactions for the system on behalf of e-commerce merchants for which it provides transaction acquiring services.
Savings Bank of Maine in Gardiner has agreed to participate and should be ready to join the trial soon, Mr. Throckmorton said, and Wells Fargo & Co. also plans to participate. Both participated in a 2005 proof-of-concept test
Nacha has been promoting the idea of using ACH payments for e-commerce since 2001, as a low-cost alternative to cards, but the concept has been used in the market only since Synovus Financial Corp. of Columbus, Ga., began its trial of the system in March.
Nacha has signed 20 merchants for the trial.
Kishore Bayyapureddy, a senior vice president at Fidelity and the general manager of its e-payments unit, said that electronic payments are among its customers' top three concerns
Though some top tier banks have shown interest in the concept, he said that the first users will likely be those that outsource their Web hosting to Fidelity.
The security of the Nacha system is likely to appeal to consumers who do not want to share personal information over the Internet, Mr. Bayyapureddy said. "We want to play a part in pushing the ecosystem from the merchant side as well."
Secure Vault Payments differ from other online transaction systems because customer need not set up an account with the merchant or payment service; instead, it links with a financial company's online banking service.
A consumer could select the Secure Vault payment option by clicking on an icon at the merchant's checkout page and then selecting a participating institution from a pulldown menu. The system passes the customer off to the bank, where the customer logs on and makes the payment before going back to the merchant site.
Only a handful of merchants are using the system so far, including iGourmet.com, a specialty food retailer in West Pittston, Pa.
Spencer Chesman, the retailer's founder and chief executive, said in an interview last month that Secure Vault is easier for customers to use than payment services such as those offered by eBay Inc.'s PayPal Inc., Google Inc., or Bill Me Later Inc. "This is a unique payment method that doesn't require you to set up a new account."
The acquiring fees for Secure Vault are lower than those required for card-not-present transactions, Mr. Chesman said, and by passing customers off to their banks, iGourmet.com avoids many of the compliance issues involved in the Payment Card Industry rules, he said.
"It's the best possible method," he said. "By not storing" card data, "I've eliminated 80% of the requirements I had to satisfy."
