Magazine article American Banker

State Officials Tap Nacha for Digital Certificates on Internet Transactions

Magazine article American Banker

State Officials Tap Nacha for Digital Certificates on Internet Transactions

Article excerpt

A group of state government associations has asked the National Automated Clearing House Association to develop a certification process for electronic transactions.

The National Association of State Purchasing Officials of Lexington, Ky., and two Washington-based groups-the National Association of State Information Resource Executives and the National Association of State Auditors, Comptrollers, and Treasurers-want to use digital certificates to ensure security in their dealings with the public over the Internet.

They see Nacha-given its experience establishing rules for paperless payments, including Social Security direct deposits-as a natural choice to define secure methods for accepting marriage license fees, parking fines, and the like electronically.

"The overwhelming majority of states are interested in exploring the Internet, and they all agree that you need to have the ability to do secure transactions," said William Kilmartin, treasurer of the Commonwealth of Massachusetts.

Digital certificates serve as the equivalent of a driver's license or passport, vouching for the holder's on-line identity. The assignment and management of certificates are often given to a "trusted third party," a role that some banks have considered playing.

State governments "understand the logic of why it is necessary to put into place this type of accreditation process," Mr. Kilmartin said.

The state groups' choice of Nacha came after a four-month search that began with a request for proposals. …

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