SODUS, New York – WCTA Federal Credit Union has become the first financial institution in the NYCE Network to conduct a real-time, bill payment transaction with a debit card. The transaction, conducted by Becky Hulett, vice president of operations, enabled her to pay her Verizon telephone bill, by calling the phone company's automated customer service center, keying in her account-specific information, entering her debit card number – without her PIN – and then keying in the respective dollar amount. The capability is part of NYCE Corporation's Enhanced Message Structure (EMS) technology, which delivers added functionality to its existing NYCE Network, consisting of 2,200 financial institutions, retailers and independent ATM deployers. By the end of 2003, all financial institutions belonging to the network will be ISO (International Organization for Standards) 8593 certified to offer enhanced EMS services. The benefits to WCTA vary, according to Hulett. "The biggest cost savings will be from the decreased number of paper checks that will need to be processed, but we won't see a significant savings unless a large number of members take advantage of the new process." At press time, not many vendors on the NYCE Network are certified to be up and running with EMS, limiting the use of the new capability. Since all NYCE members must be certified by the end of the year to offer the service, this will no doubt change. What will also change is the cost per EMS transactions to credit unions. Hulett estimates that WCTA will receive $.15 per EMS transaction versus paying $.10 for processing paper checks. As less paper checks are processed down the road, the fee to process those checks will increase even further. Concurrently, as EMS volume increases, processing costs will decrease. According to Neil Axe, director of NYCE's emerging network payment group, credit unions, as well as other financial institutions, will also benefit by having another outlet to receive interchange fees which are 55 basis points plus $.12 cents per transaction, not to exceed $.39 cents. "The financial institution can earn $.39 when allowing its cardholders to pay their bills via the telephone. This is another way for institutions to make more money through processing a debit transaction that they would otherwise be unable to generate," says Axe. NYCE receives a $.04 switching fee for each transaction. "There are so many options for bill payment that no one method works for everyone all of the time," says Hulett, commenting on the new debit card function. "It's nice, however, to have another option available to serve all of our members' needs." The credit union will not fully promote its new offering until more vendors become certified. WCTA, with assets of $210 million, has 35,000 member credit union, which represents more than 300 SEGs. All members on the NYCE Network have to go through an ISO certification process in order to offer EMS services. WCTA's becoming the first financial institution to be ISO certified was just a matter of luck, according to Hulett. "We were upgrading our ATM system that connects to NYCE, and NYCE was coming out with a new EMS standard. We decided that since we had to go through the recertification process, it made sense for us to go right to the latest platform," she says. The ISO certification process can run from between 20 to 40 hours. According to Hulett, the cost is $300 per hour. In took approximately four weeks to test the system before going live. "We went through all the transactions that are part of the EMS format, verified that those transactions came across and that they were posted properly," recalls Hulett. "Because we were the first, NYCE had to work out a few rough edges concerning database and communications issues." The live transaction with Verizon went smoothly, according to Hulett, with funds being transferred immediately. The immediate transferring of funds is benefit to both consumers and vendors. Consumers who have cash flow problems can pay bills as late as possible without incurring a late fee. Vendors benefit from having real time authorization and debiting of accounts, says John Witt, chief operating officer at BillMatrix Corporation, the Dallas-based company which was the first bill payment processor to be certified by NYCE to process vendor transactions with the EMS system. "Vendors don't have to deal with the issues of bad routing, bad bank numbers and closed accounts," he says. "You can use a checking account number over an automated phone system, but that is difficult because all routing numbers at the bottom of checks are not all consistent with all banks. Sometimes they are not up to date, so there would be a significant percentage of checks that won't get approved or cleared." Permissible billers that will use the biller-direct transaction capability are utilities, insurance companies, financial services and government agencies – regulated merchants that already have an established account and relationship with consumers. "Because there is no entering of PIN numbers, this means that the debit cardholder already has an established relationship with a biller. A phone company, for example, already knows where you live, has your phone number and has done a credit check on you in order to open your account. It knows everything it needs to know when you are conducting the transaction," says Axe. "This is not for an Amazon.com-type of transaction," Security is built into the system, but in all likelihood, no one who has stolen a debit card is apt to pay the card owner's utility bill. For Internet transactions, the network uses secure socket layer encryption. Telephone transactions are secure via NYCE's lease line network with dedicated connectivity, says Witt. The biller direct transaction capability is just part of the new services NYCE will be offering with its EMS technology. Another offering is "A2A," which will allow consumers to transfer funds between their accounts located at different financial institutions participating on the NYCE Network, via their debit cards. -

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