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Online Banking e-Commerce Payments: Has The Time Come?

Online Banking e-Commerce Payments: Has The Time Come?

Though the share of bank transfers in e-commerce transactions jumped from 3% in 2000, to 7% in 2004 in the U.S., the case for online banking initiated e-commerce payments remains weak in the U.S.

Boston, MA, July 12, 2005 – In a new report, Online Banking e-Commerce Payments: Has The Time Come? Aite Group examines the case for inducing U.S. consumers to pay online merchants via their Web banking applications. The study leverages the experiences of institutions in Canada, France, Japan, the United Kingdom, and Sweden, to assess the prospects of online banking e-commerce payments in the U.S.

North America is showing a renewed interest in online banking initiated e-commerce payments. In June 2005, Interac, the Canadian debit card association, officially rolled out a payment mechanism that enables consumers to pay merchants by initiating real-time debit transactions through their Web banking interfaces. In the U.S., the National Automated Clearinghouse Association (NACHA), the rule-making body that governs the Automated Clearinghouse (ACH) network, dusted off the project of building a similar scheme that would allow consumers to initiate ACH credit through the Web banking interface to pay e-commerce merchants.

 However, Aite Group finds that the case supporting online banking initiated e-commerce payments is strong in only two types of situations: when a significant fraction of payments are settled offline, and/or when debit card payments are not technically supported over the Internet. "Although online banking payments would very likely lift the sales of U.S. merchants, banks will have a hard time making the case for this new payment mechanism, because only a marginal fraction of e-commerce purchases are settled offline, and because both debit and credit cards are well accepted online." comments Gwenn Bézard, a Research Director with Aite Group and author of the report.

This is a 19-page Impact Note. Clients of Aite Group's Retail Banking service can download the report.