The Bank of New Zealand is to pilot an electronic credit card authorisation system this year.
BNZ electronic banking chief manager Bruce Gordon says the bank is looking to provide a solution for merchants who are accepting credit card purchase information over the Internet or the telephone.
At present those merchants get authorisations manually, either by voucher or by telephone. The pilot, expected to get underway in August, will look at providing electronic authorisation between the merchant and the bank.
“For merchants who are accepting process information across the Internet or by telephone our first step on to online payments is to make it [authorisation] as automated, and simple and as secure as possible for both the merchant and ourselves.”
Details of the pilot are still being finalised, but Gordon says it is similar to the bank’s EasiCharge service, which uses a dedicated terminal, similar to an Eftpos terminal, for accepting credit card information for settlement, taking the software off an Eftpos-type terminal and putting it into a merchant’s PC. This will enable the merchant to enter customers’ details, send them to the bank which will in turn pass that on to the credit card company for authorisation and settlement.
The bank is in discussion with a number of merchants at the moment and the pilot could involve more than one merchant.
Gordon says the process will reduce costs and improve efficiency for merchants.
“It takes somewhere between two and three minutes to do a telephone authorisation for cards. You’re bringing that right down with an online transaction. It could be a matter of seconds.”
Gordon says the bank won’t go to a pilot if it is not satisfied that security is up to scratch.
BNZ’s project manager for electronic commerce, Russell Briant, says there are a number of ways the system could run, but that decision had not been made yet.
“We’re comfortable with at least two options. One is to use a land line type connection, similar to the way we do with Eftpos, so you make it a private connection between us and the merchant.
“The alternatives are to (use the Internet and) provide encryption between ourselves and the merchant, and have clear identification on who’s allowed to access this, so it’s a known connection — not something that can be done on the fly. We have to have a relationship with the merchant.”
He says the level of any encryption would have to be “appropriate”.
“That’s all I can say at this point.” The bank has the option of supporting both methods, but cost will be a factor. “We’ll probably wait a bit for the demand curve to drive some of that.”
Meanwhile, many banks are keeping tight-lipped about any participation in a Secure Electronic Transfer (SET) likely to take place in New Zealand this year.
Visa has said two banks in New Zealand are very interested in taking part in a trial before the end of the year. Gordon could not comment on whether the BNZ would be involved in the upcoming trial. A pilot would be to prove technology rather than be a push into the market, given the low level of Internet trading.
However, Gordon expects all banks to be investigating SET. “We’ll all do it, it’s just matter of timing really.”
Spokespeople for Countrywide and National Banks would not comment on whether their banks were among the two banks mentioned by Visa. ANZ national cards manager James Mitchell says the bank does not have any definite plans to become involved in a SET trial at present.
“That’s not to say we’re not interested or that we wouldn’t [take part] given the opportunity.”
WestpacTrust and ASB were unable to be contacted before deadline.