NYCE Payments Network LLC Monday officially joined the alternative-payments space when it announced a partnership with CardinalCommerce Corp. to offer its SafeDebit Internet-debit product to online merchants. NYCE believes SafeDebit addresses consumers’ concerns about the safety of purchasing goods and services online, though some observers say the companies still face the difficult task of marketing the product.
CardinalCommerce Corp. will offer merchants SafeDebit as part of its Centinel service, which enables merchants to accept payment-authentication programs and alternative-payment brands independent of online-payment gateways, shopping-cart software and processors. Merchants also can choose to support such payment methods as Verified by Visa, MasterCard SecureCode, Amazon Payments, RevolutionCard and Moneta.
CardinalCommerce “is a critical piece of infrastructure that compliments what we’ve already built,” Steve Rathgaber, NYCE president, tells ATM&Debit News. “This [partnership] allows us to fire up a group of merchants to enable a rollout in a materially significant commercial fashion.”
The Cleveland-based payment-security company is discussing SafeDebit with its merchant partners but would not say whether any are accepting the payment form. The company provides services for 30,000 merchants, including Continental Airlines Inc., RitzCamera.com and online travel agency Travelocity.
Rathgaber expects SafeDebit transactions to flow by the end of the month.
SafeDebit creates virtual debit card information for one-time use and automatically fills in the required payment fields on the merchant’s checkout screen. No PIN is required, but the consumer still must type in a user name and password similar to online banking login credentials.
NYCE declined to reveal how much merchants will pay to accept SafeDebit.
“This is an opportunity to bring what we feel is a very high-quality debit product to the market,” Michael Keresman, CardinalCommerce CEO, tells ATM&Debit News.
Keresman believes demand exists for an Internet-debit product because consumers increasingly want to use brick-and-mortar payment methods in an online environment. Consumers are saying “if I can use [debit] at the grocery store or dry cleaner, then why can’t I use this payment method online?” he says. “It’s about time the Internet and remote-payments world catches up with the face-to-face world.”
One analyst believes NYCE and CardinalCommerce will need to market the Security SafeDebit offers to convince consumers of the product’s safety.
“Security is, without a doubt, the top inhibitor to more online shopping, and it’s the top determinant of [which consumers] adopt what payment method when they do shop online,” says James Van Dyke, founder and president of Javelin Strategy and Research of Pleasanton, Calif.
But consumers need to at least perceive that such products are safe before they use them en masse, Van Dyke says, suggesting the SafeDebit technology is similar to “end-to-end encryption” services Heartland Payment Systems Inc. and VeriFone Inc. are developing.
“[NYCE and CardinalCommerce] need to be very clear on [SafeDebit’s] safety,” he says. “They need to hit a home run on perception, not reality.”
NYCE expects “the inherent value of [SafeDebit] is going to be fulfilled because we know that there are consumers who are nervous about using the Internet,” Rathgaber says. “We know that this product will eliminate a lot of fear and provide a credible and substantial alternative [payment] driven by the bank to the merchant.”
Keresman believe SafeDebit has a good chance to gain traction with merchants and consumers because NYCE is a visible brand at the point of sale. Rathgaber, however, downplays such thinking but believes the most significant attribute of the NYCE brand is trust.
“That’s exactly what we’re tryong to manage with this application,” he says.
This is NYCE’s second foray into attempting to enable PIN-debit purchases on the Internet. The previous version of SafeDebit used a CD-ROM to provide PIN information for authentication, but it failed to achieve any market momentum.
