An initiative spearheaded by the New York Clearing House, or NYCH, will have banks assign a unique identifier to its business customers in order to support an upgraded clearing and settlement system.
Known as a Universal Payment Identification Code, or UPIC, the identifier will stay with a company even if it switches financial institutions or moves to a different location. "UPIC protects against fraud and also makes initiating payments easier and more reliable while protecting the confidentiality of account information," said Jeffrey Neubert, chief executive officer of NYCH.
Trading partners would be able to look up a company's UPIC on the Internet.
The UPIC standard supports the forthcoming Internet Clearing & Settlement (IC&S) system, which will "allow transaction data to flow along with the payment itself, providing everything from invoice numbers to vendor names," said Neubert.
"Our goal is to reduce the risk and fraud potential in electronic payments systems and to build on open architecture standards," said George Thomas, senior vice president of NYCH. "We see a tremendous advantage in having this system managed by a bank-owned and trusted third-party."
Eventually, NYCH hopes that banks will also be able to assign UPICs to individuals wishing to make payments over the Internet, although this step is slated for a later stage.