Consumer Internet purchases using ATM cards successfully piloted

[November 28th 2000]

Participants in NACHA's Internet Secure ATM Payments (ISAP) Pilot are successfully processing consumer purchases made on the Internet using ATM/debit cards. The transactions are being conducted as part of a pilot, coordinated by NACHA's Internet Council, involving approximately 100 consumers.

"The benefit of the ISAP Pilot is the development of a convenient and secure Internet payment option utilizing ATM/debit cards that would meet the payment needs of many consumers and merchants," said Elliott C. McEntee, President and Chief Executive Officer of NACHA -- The Electronic Payments Association. "The Pilot participants have demonstrated the technical feasibility of using digital signatures to authenticate ATM/debit card payments made over the Internet."

The goal of the ISAP Pilot is to establish technical standards, business practices and processes that would allow consumers to purchase goods and services over the Internet using their ATM/debit cards. Under the ISAP model, consumers are authenticated through the use of digital signatures instead of personal identification numbers, and the transactions are secured through the use of public key encryption technology. This provides transaction authentication and security that are comparable to point-of-sale purchases in the brick-and-mortar world, and provides Internet merchants with "card present" equivalent transactions.

"This secure payment method should remove barriers to Internet purchasing for many consumers and retailers," said Ron Patterson, executive vice president, product development for Star Systems, Inc., the electronic payments network that is processing the transactions. "Star's early and on-going development of this initiative reflects our belief that it is important to the future of e-commerce."

In the pilot, a consumer makes a purchase at the MagnaCash merchant Web site using an ATM/debit card issued by Commercial Capital Bank. But instead of using a PIN, the consumer digitally signs (i.e., uniquely encrypts) an electronic payment request using a private key that is stored on a "smart" chip, also issued by Commercial Capital Bank. Chip technology for the pilot is provided by both ActivCard and UTM systems corp.

The encrypted payment request is then sent by MagnaCash to its merchant processor, AmeriNet. From AmeriNet, the transaction is routed to ANI Services, Inc., which converts the request into a standard message format for the STARSM electronic payments network. Star then validates the digital signature using the public key provided by Commercial Capital Bank. The signature validation service was developed for Star by eFunds Corporation, which is also a switch processor for the Star network.

Once the digital signature is validated, the availability of funds in the consumer's checking account is verified by Commercial Capital Bank through its service provider, Fiserv. An authorization is then returned to MagnaCash, via AmeriNet. The consumer's account is debited in real-time, and final settlement is accomplished through the Automated Clearing House (ACH) Network, usually the next business day, as PIN-secured point-of-sale transactions settled through EFT networks are today.

"Cash, checks and their equivalents overwhelmingly dominate traditional retail commerce, and yet until now a cash or virtual ATM payment technology has not existed as a payment option in the world of e-commerce," said Stephen Gordon, Chairman and CEO of Commercial Capital Bank. "This payment technology addresses many of today's biggest barriers to the growth of e-commerce: security, fraud, authentication, repudiation, and payment methodology."

Links
Internet Council		http://Internetcouncil.nacha.org