The poor economy has reduced merchants' interest in a system that enables people to use the automated clearing house network to make online purchases, but Nacha, which has been testing it since last year, said it expects the technology to take off in a few niche markets this year.

The Herndon, Va., electronic payments association said that markets such as education, nonprofits and government agencies will be interested in the Secure Vault Payments system, which offers lower fees than credit cards.

Nacha began testing Secure Vault in May, but the economy has put a chill on payment software and system investments by banks and merchants, according to Samantha Carrier, the group's senior director of advanced payment systems.

"Banks are still interested in Secure Vault Payments, but the timing has been difficult," she said. "The economy has definitely slowed down potential adoption on the retail side, but we see some potential demand from niches, like higher education, that could help Secure Vault Payments get off the ground."

Secure Vault, which Nacha developed using technology from eWise Systems USA Inc., lets consumers complete ACH credit transactions online through banks' online systems without sharing account information with merchants.

Participating merchants typically receive a Secure Vault ACH payment from the customer's bank within 24 hours. With traditional ACH transactions, consumers authorize merchants to debit their accounts, and the payments typically settle within a fwo days.

Though a Secure Vault transaction costs merchants more than a traditional ACH payment to accept, it still is less expensive than some other online alternatives, Carrier said.

Acquirers pay shoppers' banks 1.35% of the sale. Nacha also collects a 1-cent network fee for each transactions, and eWise Systems receives a switch fee capped at 6 cents. By comparison, analysts said, merchants pay on average 2.5% of the sale for an online credit card transaction and about 2.1% for a PayPal transaction.

Carrier said Secure Vault could be a boon to universities, nonprofits and government agencies that want secure, lower-cost options for high-ticket transactions that can run into thousands of dollars, such as tuition and licensing fees.

The University of Georgia is testing Secure Vault for tuition payments and may begin offering it this year, Carrier said.

Analysts said building a payment network from scratch is always tough, especially in a poor economy. But Bruce Cundiff, the director of research at Javelin Strategy and Research, said Secure Vault is one of several options that could help banks raise their profile in the online payment ecosystem.

By 2012 credit cards will account for only 44% of online retail transactions, versus 56% in 2008, Javelin reported last year.

"Banks are slowly losing their overall market share of online payments to a variety of new online payment forms, such as PayPal," Cundiff said. "Instead of fearing that these new options will cannibalize their existing programs like credit cards, banks should increase their array of online payment options."

Originally planned to run for 18 months, Secure Vault's test encompasses 34 banks owned by Synovus Financial Corp. and a handful of consumer Web sites. Gary Hedges, Synovus' director of business development, said even though only his company's employees participated in the test, Synovus was "very pleased" with the results.

"Secure Vault Payments has a lot of long-term potential, particularly for billers who handle recurring payments," he said.

Some payment processors and online merchants that announced plans last year to use Secure Vault have put those plans on hold, largely because of the poor economy. Metavante Technologies Inc., which announced last year that it would offer Secure Vault to its financial institution customers, has not announced any bank participants, and the company would not discuss its progress. Apple Vacations Inc. also announced last year it would offer Secure Vault, but said those plans are on hold.

Fidelity National Information Services Inc. also said last year that it would offer Secure Vault, but it has not found any bank users.

Kishore Bayyapureddy, Fidelity's senior vice president and general manager for electronic payments, said banks like the concept.

"Banks are definitely looking to expand their online-payment offerings and in making those payments more secure," he said. "If more interest builds from merchants and billers, we will be ready to offer" Secure Vault.

Corrected March 30, 2009 at 5:13PM: A earlier version of this story made several mistakes in describing Nacha's Secure Vault Payments System. It uses ACH credits, not debits, and the merchant fee of 1.35% per transaction does not apply to bill payments, for which recipients pay a flat fee of 50 cents. The story also mistakenly described Apple Vacations' plans for using the online payment system; Apple began offering it this month.