Alternative Payments Online: Market Realities Keep Security on Top, and ACH

Alternative Payments Online: Market Realities Keep Security on Top, and ACH Underneath

Published Date: March 2006

Published By: Javelin Strategy & Research

Page Count: 6

Order Code: R3424-10

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Overview

Consumers continue to demand security and privacy in online commerce, minimizing the suc-cess of alternative payments. However, just when everyone gave up e-check—an Automated Clearing House (ACH) transaction for online purchases—several successful online payment al-ternatives now owe their success in part to the underlying ACH Network.

Primary Questions

What are consumers’ primary motivations for using alternate payment mechanisms online?
How have particular online payment alternatives addressed those motivations?
How is the ACH network affecting the success of alternative payment methods?

Major Findings

Online payment alternatives must pass consumers’ security and privacy tests to gain accep-tance. Direct ACH payments haven’t passed these tests, and the ACH Network has not suc-ceeded as a stand-alone product for initiating online payments. Several companies, however, have made effective use of the ACH Network to create successful payment alternatives. For product success, usage of the ACH Network and direct access to the demand deposit account (DDA) must be reconciled with consumers’ privacy-related security concerns. Successful ven-dors also seek to provide platforms for integrated online payment offerings, as opposed to point solutions.

Author: Bruce Cundiff, Research Analyst

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