US electronic payments body Nacha is organising an online payments pilot in which consumers transacting over the Web are authenticated by their own financial institutions before authorising funds transfers from their accounts.
Nacha says the idea behind the scheme is to leverage banks' mandated investments in authentication technology, as stipulated by FFIEC guidelines.
It calls for consumers to authorise payments over the Internet by first logging in to their online bank account to confirm transaction details. Nacha says that such a system - in which online shoppers are automatically redirected to their bank at the merchant check-out - would ensure that consumer financial account information and card details are not exposed to misuse or theft from online merchants.
The pilot comes on the heels of a proof-of-concept phase, involving National City Bank and Radio Shack, which Nacha claims demonstrated that the round-trip transaction process works well and quickly, and that users found it easy to operate. The network provider for the proof-of-concept, Australia's eWise Systems, will also serve as the network provider for the pilot test.
Arthur Markos, a Nacha director and president of Gardiner Savings Institution, says: "The proof-of-concept phase showed us that financial institutions can play the central role in new online authentication and payment solutions. Gardiner's customers already trust us. We want to explore how that existing trust can enable our customers to conduct more of their business online."