Noca is an online payment startup that claims it is more secure and also cheaper for merchants. Techcrunch(www.techcrunch.com) has a great article titled “Is Noca the next paypal(http://www.techcrunch.com/2009/02/09/is-noca-the-next-paypal/)”. Yes, I could not come up with a better title for the blog J. Here is one of the comment on the blog which describes how this works in depth:
Fraud in checks/ACH is substantionally less than fraud in credit cards. The reason is simple - credit cards don’t require “two way” identification. Doing an ACH transaction requires both transacting entities to have bank level verification as opposed to credit cards. If I have somebody’s credit card info I can commit virtually unlimited fraud. Having somebody check/bank account number doesn’t give me that ability.
As far as individual indemnification is concerned the user is indemnified by the bank and NACHA (federal govt body that regulates ACH/checks) regulations
http://en.wikipedia.org/wiki/A.....ring_House
“In accordance with the rules and regulations of ACH, no financial institution may simply issue an ACH transaction (whether it be debit or credit) towards an account without prior authorization from the account holder (known as the Receiver in ACH terminology).”
At surface this looks very secure but really painful from a customer experience standpoint. Imagine that you have to approve each transaction with your bank. Doing approval for large transactions does not make sense either as that is when I need a credit card.
If the ACH transaction were to become mainstream, then the NACHA compliance will become a big software industry just like PCI compliance. This approach also heavily relies on consumer cell phones. What about the security on windows mobile? Cell phone security is becoming a bigger market with the growing use of smart phones and services like this will make mobile devices a target for hackers!