The bank-owned New York Clearing House has unveiled plans to introduce a new Universal Payment Identification Code to protect against fraud in Internet-enabled payments. The XML-based code is being lined up to supplant existing X12 and Edifact standards and will be rolled out across the NYCH's core retail and wholesale networks.
Jeffrey Neubert, chief executive officer of the New York Clearing House says the new functionality will be phased in later this year over the NYCH's Electronic Payments Network (EPN) and the Clearing House Interbank Payments System (CHIPS). It will not be fully implemented until summer 2002.
"The key to successfully implementing an Internet-enabled payment system," says Neubert, "is to maintain or upgrade the current payment systems and take advantage of the security, reliability and universal access of the current infrastructure."
He believes the NYCH approach eliminates the need for each bank to invest in functionality best served by a bank-owned utility like the NYCH.
"Web start-ups did not have the traction needed to succeed," he adds. "The support of large financial institutions is a requirement, and banks will need to work cooperatively to make electronic payments succeed."
A key feature of the new enhancements is a Universal Payment Identification Code (UPIC) designed to protect against fraud and make payment initiation easier. Under the proposals, banks will establish a UPIC with the NYCH for their business customers that will "mask" confidential data such as their bank account and bank routing number, and that will stay with the company regardless of whether they change banks or move to another city or state. Eventually, this capability will be expanded to individuals, says NYCH.
George Thomas, NYCH senior vice president says that the goal is to deliver payments with full remittance information through a system that leverages existing systems infrastructure. He describes the role of the NYCH as "assisting" the banking industry in an evolutionary transition from existing data standards such as X12 and Edifat to a new standard based upon XML.
"Successfully moving electronic payments to the Internet requires several key components that only a payment system operator like the NYCH can provide," he says.