Credit card purchases online are commonplace thanks to the advent of sites

San Diego -- The process of using a credit card to conduct business on the Internet has become commonplace thanks to the advent of sites such as Amazon.com and eBay. Now the idea has picked up support from state and local government officials doing online procurements.

But the next great innovation for citizens and government could very well be using an ATM card to perform online transactions and procurements, a service that may be available within a year in some parts of the country, according to an official from an electronic funds transfer (EFT) network company at last week's National Electronic Commerce Coordinating Council conference.

Julie Saville, vice president of Star Systems Inc., a regional EFT that serves about 3,700 financial institutions and 79 million cardholders, said three models are scheduled to be rolled out in pilot projects next month. The pilots are designed to test concerns of Web-based ATM transactions, including security and privacy issues, employing different technologies to the process and examining the costs and fees associated with ATM transactions.

"Different agencies in different states have asked about the ATM card option," Saville said. "Some want to use it for property taxes, but the average amount could be about $1,300, and that exceeds the daily withdrawal limits for most banks...and that's the challenge for higher-priced services."

The first model will use an ATM card and feature a device that can be plugged into a computer keyboard where the personal identification number (PIN) can be entered securely, Saville said. "We don't want anyone to be entering their account number and PIN on a keyboard," she said.

The second model will use digital signatures, with the consumer and funds verified by a financial institution. The third pilot will be based on a "trusted third party" scheme in which the customer is verified by a third party and a PIN-less online debit is routed to the financial institution, Saville said.

All three pilots should be rolled out by year's end and should incorporate different public and private-sector partners, including Citibank and the National Automated Clearing House Association -- the nonprofit trade association that promulgates rules and operating guidelines for electronic payments (www.nacha.org) -- and others, Saville said.

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