News

Contacts:

• Michael Herd
  703/561-3924
  mherd@nacha.org
• Julie Hedlund
  703/561-3915
  jhedlund@nacha.org

Herndon, VA, October 27, 1999— The Internet Council of NACHA – The Electronic Payments Association is preparing a pilot program in which consumers will pay for Internet purchases by using their ATM cards combined with digital signatures.

"The goal of the pilot program is to develop and test a low-cost, convenient payment option for Internet purchases incorporating robust security and immediate authorization," said Lucien Dancanet, Vice President, Information Security Director of Citigroup. "In this pilot a financial institution validates a digital signature, similar to the way it normally validates a personal identification number."

In addition to technical requirements, the pilot will develop business practices and operational rules that will allow regional and international ATM networks to communicate with each other to approve consumer purchases. Current participants in the pilot include Citigroup, STAR_sm, AmeriNet, Inc., Internet Revenue Network, PULSE, eFunds Corporation, and UTM systems corp.  Technical and security consulting is being provided by Certicom, and additional legal advice is being provided by the Georgia State University eCommerce Institute.

Julie Saville, Vice President of Star Systems, Inc., said, "Currently, ATM networks do not allow ATM cards to be used for Internet purchases. This pilot program could enable the wide-scale use of ATM cards for e-commerce, enhancing the value of those cards for consumers, merchants, and ATM networks' member financial institutions."

"Eighty percent of U.S. households have ATM cards but cannot use them to make purchases on the Internet," said David Kerlin, President of AmeriNet, Inc. "This pilot is an important step in allowing Internet purchases for people who prefer to use their ATM cards."

In the pilot, a participating consumer would use a private key to generate digital signatures. The private key is securely stored in a chip on a device such as a smart card or within a web application. When making an Internet purchase, the consumer would use his or her ATM card number; but instead of using a personal identification number (PIN), the consumer would digitally sign an electronic authorization form. The form is then sent to the consumer's financial institution, where the digital signature is verified.  The merchant would then receive confirmation, the consumer's checking account would be debited through a participating ATM network, and the payment would be settled through the Automated Clearing House (ACH) Network.

Elliott C. McEntee, President and Chief Executive Officer of NACHA, said, "The benefit of this pilot to consumers is the development of a convenient and secure Internet payment method tied directly to a checking account.   Merchants would have a guaranteed, low-cost payment mechanism running in real-time.  Financial institutions would act as trusted third-parties, just as they do every day for other commercial transactions."

As part of the pilot, a technical test will be conducted during the 4^th quarter of 1999 to demonstrate the feasibility of a consumer digitally signing a merchant's form, and transporting the digital signature through third-party processors and ATM networks to financial institutions.  A full-scale pilot program, conducting real transactions, is scheduled for the 2^nd quarter of the Year 2000.

The Internet Council is encouraging interested financial institutions, merchants, processors and ATM networks to join the pilot before the full-scale launch in 2000. Additional information is available on the Internet Council's web site at http://internetcouncil.nacha.org

About NACHA - The Electronic Payments Association

NACHA represents more than 12,000 financial institutions through its 34 regional payments associations, and 600 organizations through its seven industry councils and corporate Affiliate Membership program.  NACHA develops operating rules for the Automated Clearing House (ACH) Network and for electronic payments in the areas of Internet commerce, electronic bill payment and presentment (EBPP), financial electronic data interchange (EDI), international payments, electronic checks, electronic benefits transfer (EBT) and student lending.