Attempting to trump the banks and nonbanks that have introduced person-to-person payment systems for the Internet, NYCE Corp. has begun promoting a technology that will let people pay anyone from a multitude of devices, including automated teller machines and telephones.

NYCE, the electronic funds transfer network that dominates the Northeast, says its service, slated to be introduced early next year, will settle the transactions in real time, which NYCE executives say is an advantage over competing systems. NYCE, which processes ATM transactions and PIN-based debit card transactions for more than 47 million cardholders, plans to use its electronic transfer infrastructure to facilitate the payments.

There are a few big catches. The person making the payment would have to know the ATM or debit card number (though not the actual account number) of the person receiving the payment, and both people must have accounts at banks that are members of NYCE. Other person-to-person payment systems — like Bank One Corp.’s eMoneyMail and X.com’s PayPal — do not have these limitations.

NYCE executives argue that people will give their ATM or debit card numbers to strangers if it means getting funds deposited in their accounts. But in the example NYCE gives of a situation in which its system would be useful — a person who buys a vase from a stranger through an online auction site — buyers and sellers are already paying one another online without disclosing any account information to one another.

NYCE will pilot the project next year, but it could take as long as two years to get the system fully up and running, executives there predict. “This is going to take awhile to get the infrastructure updated” to make the system work, said James S. Judd, senior vice president of NYCE. But “few people will be disappointed that $100 landed in their account” and be available immediately.

NYCE is in the process of upgrading its network to make it available for so-called P-to-P transactions, so that cardholders can pay people without having to swipe their cards. Once the system is up and running, people will be able to use it pay others over the Internet, through handheld wireless devices, ATMs, at bank branches, or by telephone through a bank’s voice response unit. The sender’s bank would determine the pricing, policies, and other procedures, Mr. Judd said.

“It will be up to the financial institution to decide what their customers are interested in,” Mr. Judd said. NYCE, of Woodcliff Lake, N.J., would not name any of the “leading financial institutions” it says are planning to participate in the “first phase” of the service in the first quarter of next year.

So far, NYCE and the other regional networks have been largely shut out of the e-commerce boom, because the transactions they handle do not flow through the Internet. NYCE has been at the forefront of trying to remedy this situation; the company developed SafeDebit, a special PIN-based debit card that fits in a CD-ROM slot and can be used exclusively for Internet payments. Several banks and EFT networks have agreed to license the product, but it is not in commercial use yet.

NYCE’s person-to-person payment service represents another attempt by the company to get a piece of the Internet pie. “There is a tremendous need for real-time movement of money,” said Ken Kerr, a senior research analyst at GartnerGroup Financial Services in Durham, N.C. Companies like Western Union, the First Data Corp. subsidiary, do provide such a service, “but you pay a big fee,” Mr. Kerr said.

He saw some drawbacks to NYCE’s system, including the potential security risk of handing out one’s ATM number. Family members might not object, but merchants certainly would.

And though NYCE sees its real-time capabilities as an advantage, Mr. Kerr was not so sure. “As a buyer, I don’t want to pay right away” for something purchased online, he said. “I want to see the product before I send money.”


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