NACHAs Online Payments Pilot

1
NACHAs Online Payments Pilot

• April 10, 2006
• Speakers
• Elliott McEntee, President CEO, NACHA
• Samantha Carrier, Director, eCommerce Group,
  NACHA
• Alex Grinberg, President, eWise Systems

2
Agenda

• Background
• The Payment Method Defined
• Demos
• Stakeholder Benefits
• The Pilot Defined
• The Role of eWise
• Timeline
• How to Participate

3
Another Online Payment Option?

• Rapid growth of Internet commerce has led to
  industry challenges.
• Privacy and security are primary concerns for
  consumers who do not transact online.
• VISA Press Release (Jan. 06)
• Study of more than 6,000 consumers
• 24 report shopping less online
• 62 are more discriminate about sites where they
  make purchases
• American Banker (Jan. 06)
• Fraud is now the top reason given for chargebacks
  on several networks
• Global Payments had a 10 to 20 increase in fraud
  in 2005
• Credit Push like payments are widely used today
  in Europe and Japan

4
Background

• NACHA began looking at credit push in 1998
• Project ACTION completed in 2002
• A Proof of Concept (POC) organized in 2005 to
  evaluate the technical viability and business
  case for credit push
• POC findings presented to NACHA Board in February
  2006
• NACHAs Online Payments Pilot approved to test
  consumer bill payments, purchases and funds
  transfers

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The Payment Method Defined

• Credit Push simply refers to using online
  banking to initiate Internet payments
• Consumers keep financial information private
  never disclosed to the seller
• Seller receives real-time authorization of
  guaranteed payment (ACH Credit)
• Financial Institutions authenticate the buyer,
  reducing risk and fraud
• Relieves seller burden to secure/protect consumer
  financial information

6
The Pilot Defined

• Transactions tested consumer bill payments,
  purchases, funds transfers
• Pilot Participants
• Buyers FI (Guaranteeing ODFI)
• Sellers FI (Receiving FI)
• Businesses (online merchants, billers, state
  govts.)
• eWise (pilot processor)
• Participation Requirements
• Buyers FI must have deployed multi-factor
  authentication for online banking
• Business must be sponsored by Receiving FI
• Resources necessary to work with eWise on
  integration
• Pilot Fees
• Interchange and network fees will be collected

7
Stakeholder Benefits - FIs

• New potential revenue stream - FIs generate
  little direct revenue from the online banking
  channel today
• Use existing infrastructure - costs to support
  this channel have increased in the areas of
  authentication and security (FFIEC Guidance)
• Leverage customer relationship as trusted
  broker of financial information
• Meet growing demand from businesses and
  governments for new online payment services

8
Stakeholder Benefits Business Participants

• Sales lift potential for new customers, higher
  tickets, more purchases, lower shopping cart
  abandonment
• Real-time authorization of a guaranteed payment
  (ACH Credit)
• Financial Institution authenticates known
  customers
• Reduce risk and fraud
• Eliminate need to secure/protect customers
  financial data

9
Stakeholder Benefits Consumers

• FI is already a trusted broker of private
  financial information
• Security and privacy no financial information
  shared with the seller
• Familiar user interface with online banking
• More payment control and flexibility

10
Online demos

• Review of each demo
• Consumer Purchases
• Consumer Bill Payments
• Funds Transfers

11
eWise Systems

• eWise is an international provider of on-line
  payment systems and on-line banking applications
  offices in US, UK and Australia
• Selected as technology provider for NACHAs
  proof-of-concept in January 2005
• Successfully completed the proof-of-concept
  technical test meeting or exceeding all success
  criteria
• Will provide the eWise Network for NACHAs Online
  Payments Pilot

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The Role of eWise

• eWise, in partnership with Unisys, will serve
• as the NACHA pilot processor and provide the
• eWise Network including
• eWise Payment applications
• Data center hosting and support
• Hardware, software, networking, connectivity
• Back-up, testing, development environments
• Implementation support for FIs and businesses
• Business process services - transaction
  reporting, exceptions, reconciliation

13
eWise continued

• Security and ongoing testing
• SDKs and documentation
• 2nd/3rd level support for Guaranteeing ODFIs
  (buyers FI) and businesses within agreed SLAs
• Compliance certification of participating FIs and
  businesses
• Disaster recovery

14
Pilot Timeline

• Recruitment is currently underway
• Pilot participants confirmed by August 30th
• Pilot planning through December 2006 to address
  implementation and finalize business rules
• Pilot launch in early 2007
• Pilot Run time 12 months
• Additional participants accepted during the pilot

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Next Steps

• INTERESTED IN LEARNING MORE ABOUT THE PILOT?
• Attend the Online Payments Pilot Session at
  NACHAs PAYMENTS 2006 Conference May 7-10th in
  San Diego
• Visit the Online Payments Pilot Booth at the
  PAYMENTS 2006 Conference
• Contact Samantha Carrier at NACHA
  scarrier_at_nacha.org to schedule a follow-up
  meeting

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QA

• CONFERENCE CALL COMPANY WILL FACILITATE QA