Banks mull online payment options

By Candice Jones for Consology
Johannesburg, 06 Mar 2007

Only one of SA's major banks enables debit cards to be used for online payments. According to Kevin Meltzer, Consology business development director, this functionality could have a significant impact on the Internet marketplace.

More companies would take up a combination of e-billing and e-payment options if online payment options were expanded, says Meltzer. He states most bank cards now have a debit transaction option, which would make an online debit card payment a practical option.

Christo Vrey, GM of digital channels at Absa, says the option is possible and is being implemented. However, there are difficulties.

"Credit cards and debit cards run on different financial structures," Vrey says. A debit card is commonly linked to a current or savings account and these are linked to a different network with MasterCard/Maestro and Visa Electron for ATM and point-of-sale transactions, he adds.

Vrey says the online debit transaction does not appear to be as popular as credit or direct debit payments. "It may be because when a customer makes a purchase on a credit card, there is an interest-free period in which they can make the payment; whereas the payment is taken directly out of a savings or current account when a debit transaction is made. Credit transactions are made through a mature business model."

He adds that fraud may become a problem with debit card payments.

Meltzer says there is a growing trend to create a single point of presentment, and he notes that some banks provide technology to attempt this. "Standard Bank has the AutoPay system, which will allow it to pay online retailers," he says.

What the banks say

Ross Linstrom, media spokesman for Standard Bank, says: "Processing of an ATM PIN-based debit card requires very stringent security around the transporting of the PIN."

Linstrom adds the AutoPay facility is linked to customers' Internet banking account and allows them to pay merchants using any account linked to their Internet banking profile.

Walter Volker, head of group payment systems at Absa, says: "Absa offers two types of debit card, namely unembossed (online electronic only), PIN-only debit cards (branded Maestro and Electron), and embossed or signature-verified debit cards (generally referred to as cheque cards, and branded Visa and MasterCard). The latter can be used on the Internet for purchases of transactions." He adds the unembossed card cannot be used because of security reasons.

"Options going forward to support unembossed, PIN-only debit cards on the Internet include enabling remote authentication via a chip card reader once the cardholder has been issued with a chip debit card. The other alternative, which is also being investigated, is to implement a service such as Verified by Visa, which would enable participants to securely use this service," says Volker.

Sonja Coelho, debit card operations manager at FNB, says: "We do not allow online purchases on our debit cards at this stage due to the lack of authentication (the PIN cannot be entered online) and high fraud risk associated with these transactions."

Alon Stransky, senior business manager for cards at Nedbank, says: "We are unable to provide clients with the ability to perform debit card (Electron and Maestro) transactions on the Internet, due to risk concerns, as the latter is PIN-verified."

He says credit or cheque cards are more secure and customers should upgrade to these if they want to perform safe online transactions.