Nacha, the electronic payments association, has started using a security feature developed by The Clearing House Payments Co. LLC that makes it safer for companies to send automated clearing house payments.
The Clearing House, of New York, said Nacha is the 30th organization to agree to use a universal payment identification code (UPIC) in place of an account number, thus keeping that sensitive information private.
The Clearing House markets the payment code through its ACH unit, Electronic Payments Network.
Nacha oversees the rules and development of ACH payment formats. Michael Herd, a spokesman for the Herndon, Va., organization, says it uses the ACH network to pay its employees, to pay some suppliers, to collect dues from members, and to accept payments for conferences and publications.
But in order to accept ACH payments, “we have to give them our account number,” Mr. Herd said, and “it’s always in the back of your mind” that the information could be used to make fraudulent withdrawals.
In fact, in 2002 someone used Nacha’s bank account information, which it printed on its conference brochures, to buy several computers from a major electronics manufacturer. Mr. Herd said his group now uses debit blocks and other tools to prevent unauthorized people from debiting its accounts.
The UPIC provides an additional level of security because it functions as a substitute account number. Customers route ACH payments to a UPIC number rather than to a standard bank account number; when the bank receives the payment it is sent to the recipient’s account.
As a result, The Clearing House says, the UPIC can be safely published on a user’s Web site or printed on its invoices. UPICs work only for pushing ACH credits to the user, and cannot be used to debit an account or to forge a check.
Rossana Salaris, a senior vice president at The Clearing House, said interest in UPICs has picked up sharply this year. The product was introduced in 2002, but until now the clearing house group had never set up more than three in a year; so far this year it has set up 24, Ms. Salaris said.
Seven bank customers of Electronic Payments Network have issued UPICs to their commercial clients. Nacha’s UPIC was issued by M&T Bank Corp. of Buffalo, Nacha’s corporate bank. Dean Pavlakis, a senior vice president in commercial product management, said Nacha was its first UPIC user, but M&T plans to offer the codes to the 10,000 companies, government units, and nonprofit organizations that use its cash management services.
Still, he said demand for the product is low. “We are not wildly optimistic that we are going to be signing up hundreds of customers in the first year. They’re not beating down our doors for this,” Mr. Pavlakis said of the payment code. “But we expect within five years to have hundreds of customers using it.”
Mr. Herd said Nacha received its first UPIC payment, for $290, on Sept. 5 from a customer registering to take an exam. The number appears on the payment page of its online registration system.
Mr. Herd said Nacha’s adoption of the UPIC does not affect another project it is pursuing — to enable consumers to make ACH payments to online merchants more safely. At its annual conference in April, Nacha detailed a credit push system that connects consumers’ online banking sites with Internet merchants, so people can pay for purchases in much the same way as they pay bills online.
He said a business could use a UPIC in conjunction with the credit push system, or could use either separately. “They are not mutually exclusive,” he said.
