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Debit Card Payments Authorized by Digital Signatures

About 100 consumers are now participating in a pilot test program for making Internet debit card purchases authorized by digital signature instead of personal identification numbers. The pilot, which is being coordinated through the National Automated Clearing House Association's Internet Council, began in November 2000 and will run through March 2001.

Participants use either a standard debit card or a smart card. Those with smart cards have a chip embedded in the card that contains their personal digital signature keys. Those with debit cards have special devices that contain their keys that can be inserted into a computer disk drive. The cards and private keys are issued by Commercial Capital Bank.

For this pilot, consumers that wish to make a purchase using a digital signature visit the MagnaCash merchant Web site. Using the smart card or the device, they "sign" the payment requests, which is sent to AmeriNet, a merchant processor. From there the transaction is routed to ANI Services, Inc., which converts the request into a standard message format to be processed through the STAR electronic payments network, where the digital signature is validated by a public key provided by Commercial Capital Bank. Once the signature is validated, funds can be released from the consumer's checking account.

While it all sounds rather complicated, transactions actually take no longer than standard PIN-secured debit transactions with funds available to merchants the next business day.

When fully implemented, this particular system will allow an Internet retailer that displays a STAR logo to make debit transactions with the digital signature system. Star

Copyright © 2001 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 11, No. 3, 3/01

First published on 03/01/2001

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