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NACHA's Secure Vault Payment (SVP) system, which was built to authenticate and process online payments for merchants and billers, may be finding some acceptance among an unlikely constituency: universities and colleges. The University of Georgia will likely begin accepting tuition fees through SVP after the first of the year, followed by two other Georgia schools, Georgia Tech and Columbus State University, as well as the University of North Carolina, according to Kendall Myles, the executive who is heading up SVP merchant recruitment. Myles is concentrating on Southeastern schools to begin with because the largest bank to participate so far in SVP, Synovus Financial, is based in Columbus, Ga. A holding company for some some 39 institutions, Synovus will both authenticate its own online-banking customers and sponsor merchants into the SVP network as part of an 18-month pilot program NACHA launched this spring (Digital Transactions News, May 6). NACHA, the governing body for the ACH, saw its first SVP merchant, online wine and cheese purveyor igourmet.com, go live in May (Digital Transactions News, May 21). Myles is also working with TouchNet Information Systems Inc., a Lenexa, Kan.-based vendor of commerce-management systems for colleges and universities, to integrate SVP into its products. Myles hopes SVP will win acceptance with universities and colleges in particular because of the rising acceptance costs they face related to credit card payments for tuition. Convenience fees, which many schools put in place to cover the costs of card acceptance, have created friction with some students and parents, Myles says. Meanwhile, electronic checks through the automated clearing house network, which some schools have turned to, create problems because schools can't tell at the time of payment whether the transaction account has sufficient funds. Tracking down cases of non-sufficient funds, collection costs, and costs related to removing students from classrooms when classes have already started have driven up the average cost of e-checks, Myles says. All of this makes SVP, with its bank authentication and guaranteed payment, look attractive to colleges and universities, he notes. “They want to drive all tuition payments online,” he says. A consumer who chooses this option to pay at checkout is redirected to a log-in page for her online-banking program. After she authenticates herself, she is presented with a payment page summarizing the details of her purchase or bill payment. If she authorizes the transaction, she is directed back to the merchant's site and the switch instructs the merchant that it has good funds and can ship merchandise. The program levies an interchange rate of 1.35% on merchant payments and a flat fee of 50 cents on bill payments, payable by acquirers to authorizing banks. In addition, the program collects a switch fee from both sponsoring and authorizing banks, with a cap of 6 cents to each. The switch is operated by Denver-based eWise Systems USA Inc., a unit of an Australian software company. A founding investor in payments-software vendor CardinalCommerce Corp. and formerly one of its executives, Myles signed on as a senior vice president with eWise in November and works full time on the SVP program. Myles says working with TouchNet helps sells SVP to the TouchNet installed base of some 700 schools because TouchNet's software automates the process of linking specific payments to student records. He adds that colleges and universities can help get more banks involved as authenticating institutions. “A university carries a lot of weight with the banks where it houses its endowment,” he notes.
