Star Systems Inc. and NYCE Corp., which operate automated teller machine/debit card networks, this week said they have begun offering a new type of debit card that consumers can use to purchase products on the Internet. The new cards also will give banks a new product to market to their customers, and at least one bank is planning a direct mailing of the cards similar to the way America Online mailed CD-ROM start-up disks to encourage people to sign up for its services.
The SafeDebit card, which is the size and shape of a credit card but is placed in the CD-ROM drive of a consumer's personal computer, allows customers to pay for their online purchases directly from their checking accounts without transmitting their account numbers over the Internet.
“Consumers want to be able to pay for products online the way they do in the dirt world, which is sometimes they pay with a credit card, sometimes they pay with a checking account and sometimes they pay cash,” said Paul Tomasofsky, vice president of the Advanced Products Group at NYCE Corp., Woodcliff Lake, NJ. “Up until now, it's been hard for consumers to pay for their online purchases using their checking accounts.”
He said the SafeDebit cards, one of several new payment technologies seeking to make e-commerce inroads, would attempt to take advantage of consumers' familiarity with using ATM/debit cards in the offline world.
Star Systems, Maitland, FL, has 80 million cardholders throughout the Southeast, Midwest and West, and NYCE has 32 million, primarily in the Northeast and in Michigan. Together they hope to leverage their familiarity to consumers and their relationships with thousands of banks to make the SafeDebit cards a more widely accepted form of payment on the Internet. So far only two merchants, Walgreens and CVS, have agreed to accept the cards for online payments.
Although Jupiter Communications, New York, reported that about 95 percent of customer transactions in the online world involve the use of a credit card, it said there was room for other payment options like ATM/debit cards to gain inroads.
In addition to giving consumers a new option for paying for their online purchases and giving merchants a new option for accepting payments, the SafeDebit cards also will give banks a new marketing tool.
Michigan National Bank, Farmington Hills, MI, is the first NYCE member bank to sign on as a charter issuer of the SafeDebit cards, and the company is planning to mail them directly to its checking account customers, according to Tomasofsky. A spokesman for the bank was not available to discuss more specific plans for the campaign at press time.
The cards also will be promoted through enclosures in bank statements, in-store promotions at bank branches and online efforts. Customers who click on a SafeDebit icon on an e-commerce site will be able to register for the cards online, Tomasofsky said.
Both NYCE and Star Systems will work with issuing banks to develop educational and marketing programs for banks to teach their customers about the cards, and not all may choose to market them by mailing them directly to customers.
“That will be up to the individual financial institutions, and we're going to be working with them individually on that,” said Barbara Span, a spokeswoman for Star Systems, Maitland, FL.
The companies hope to complete the first online transaction using the cards by April 1.
An Australian company called QSI Payments Inc. developed the technology in partnership with NYCE, which is leasing the technology to Star Systems.