Merrick Bank Corp. has signed on to offer Secure Vault Payments to merchants through its ISO network, and sources say the fledgling payment method may become available to 17 million consumers before the end of this month and to 50 million by year’s end.
When consumers click on a Secure Vault Payments button on a retailer’s website, a switch takes them to their own bank’s Web page to complete the transaction over the automated clearinghouse network. After they make the payment on their bank’s site, the system takes them back to the merchant’s site for confirmation. The process does not expose the consumer’s personal information to the retailer.
NACHA, the electronic payments association that sets ACH rules, is working with Denver-based eWise Systems USA Inc. to offer Secure Vault Payments.
“NACHA’s blessing and impetus” are bringing “credibility and structure” to the technology, convincing Merrick to become an early adopter, says Charles S. Crawford, senior vice president of business development for the South Jordan, Utah-based institution’s Merrick Merchant Services unit.
“We’ve seen a lot of interest from both ISOs and merchants” in Secure Vault Payments, adds Travis Soto, Merrick assistant treasurer and a key player in the deal to begin offering Secure Vault Payments.
In November, U.S. Bank, the nation’s fifth largest bank, became the first major consumer bank to modify its technology platform to accommodate Secure Vault Payments (
U.S. Bank plans to complete preparations for the technology and make it available to its 17 million customers this month, says Soto.
Other major banks have committed themselves to offering Secure Vault Payments but have not announced their intentions, says Dean Seifert, eWise senior vice president, network and business development. Their participation will make the technology available to 50 million consumers by year’s end.
Systems that work the same way as Secure Vault Payments account for all online debit purchases in Canada, 60% of online purchases in the Netherlands, 60 million transactions annually in Columbia and a significant proportion of transactions in Germany over the last three years, Seifert says.
Seifert says eWise has not been involved with those efforts abroad but has set up shop in the United Kingdom to bring the system there.
The staff at eWise has begun working on standards with Canada that Seifert expects will enable American banks and merchants to make Secure Vault Payments transactions across the border by the end of the summer.
In the United States, the technology has a “long history,” Seifert says. NACHA has been aware of it for 10 years, had a prototype more than three years ago, started testing with universities and municipalities more than two years ago, and began promoting it heavily a year ago, after joining forces with eWise, he says.
The information-technology projects necessary for consumer banks to accept the Secure Vault Payments switch can require a year or more to complete because of backlogged work and slow movement, says Crawford.
Soon, consumer banks will be touting the technology to the public, according to Seifert, because they will receive a cut of the margin on each transaction.
Once consumers learn about the technology, they may take an interest, sources say.
“For a certain type of consumer concerned about online security, it may be worth adopting,” David Fish, a senior analyst for Maynard, Mass.-based Mercator Advisory Group Inc., says of the technology.
Consumers also benefit because Secured Vault Payments transactions require an average of 15 seconds, compared with about a minute to enter credit card data on a site, Seifert says.
How much merchants would pay for such transactions has not been established because the technology has not become widespread, sources say. However the fees appear likely to fall short of credit card fees, especially on big-ticket purchases, sources say.
Payments made with the technology to utilities and government agencies could be subject to fees of less than $1 per transaction, says Soto.
The Federal Reserve Board, which has proposed capping debit card interchange fees at 12 cents, could undercut Secured Vault Payment, he notes.
Merchants benefit because they transfer all of the charge-back risk to the consumer banks that authenticate the purchases. That could bring a sigh of relief for merchants on big-ticket purchases, Soto notes.
Getting the word out to merchants could fall to ISOs and agents, a process Merrick Bank says it is launching with its deal with NACHA and eWise.
