NYCE Banks Testing "PINless" Person-to-Person Transactions Via ATMs, Phone and Web

NYCE has announced an advanced payments initiative that will enable real-time person-to-person (P2P) transactions. When fully implemented, NYCE network customers will be able to conduct P2P transactions from devices that can communicate with NYCE's processing platform, including ATMs, PCs, VRUs and PDAs.

Five banks, which NYCE declined to identify, have agreed to test the system in pre-production mode in the first quarter of 2001. "We'll be using the first three months of the first quarter to do some real live transactions using bank employees," said James Judd, senior vice president at Woodcliff Lake, N.J.-based NYCE. "We should be in full production mode by the second half of the year." It will take up to two years to certify all 2,400 NYCE banks for the new capabilities. The NYCE infrastructure, which today requires the use of an ATM card number and a PIN, will be expanded to handle PINless debit and credit transactions, Judd said. Eventually, all NYCE institutions will be required and certified to accept the PINless credit transactions. "All of our participants are receiving PIN transactions, and they'll be making some minor coding changes to accommodate a credit transaction that arrives without a PIN," said Judd.

Banks can decide whether they want to handle debit transactions and which options they'll offer to customers. Transactions could be initiated via the bank teller, ATMs, VRUs, the Web, and even wireless devices as they become more prevalent. "It's up to the financial institution to determine how they're going to offer this product to their customers," Judd said. "Ultimately, they are the ones making the decisions about whether to offer, how to offer, how to price it, and their business policies."

As the transaction enabler, NYCE will be compensated through transaction fees, which have yet to be determined. "This, in all likelihood, would carry a premium switch fee simply because of the value it delivers and the investment we've made in it," said Judd.

The company has already initiated research to better understand consumer attitudes and preferences for P2P transactions.

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