ATM Cards: Coming Soon To Your Favorite Online Store?

On Monday, Cash Technologies, Inc. (Nasdaq: CHNG) announced a system that could, in theory, allow customers to pay for online purchases with their ATM cards. The company reports that its new EMMA TMe-commerce transaction processing system will allow millions of Web users without a credit card an easy and secure way to shop online.

“For the first time, Internet commerce merchants will be able to accept ATM card payments, instantly debiting the checking or savings account of the customer,” said Cash Technologies chairman and CEO Bruce Korman, who spoke with the E-Commerce Times in an exclusive interview.

While it seems like an interesting idea, with huge potential, the underlying technology still sounds a lot like science fiction.

For Your Eyes Only

The new system is a result of Cash Technologies’ recently formed technical development agreement with Sensar, Inc., which positions itself as the world’s leading supplier of iris recognition systems. The systems are able to confirm the identity of an individual based on the unique patterns of the human iris.

The iris is the colored ring of tissue that surrounds the pupil of the eye, and each person’s iris is absolutely unique. In the entire human population, no two irises have the same mathematical pattern. In addition, it is one of the few human body parts that do not change with age. Cash Technologies’ new system will utilize iris identification products developed by Sensar.

Untapped Potential for Online Sales

The present ATM network, with nearly 10 billion transactions per year in the U.S., is used primarily for cash advances and local debit transactions, and has not been utilized for Internet commerce. Currently, credit card transactions dominate World Wide Web purchases, however millions of potential online shoppers do not own a major credit card. In addition, credit card fraud has been a significant problem for some online merchants and securities trading firms.

Cash Technologies believes that their new system is not only a way to make online shopping more accessible to those without a credit card, but is also a leap forward in payment security.

Will It Catch On?

It’s one thing to use iris scanning technology in the defense industry, where security identification is a given. It’s another thing to expect that online shoppers are going to want to have their eyes scanned, just to make a simple purchase over the Internet.

We asked Cash Technologies CEO Bruce Korman whether he thinks this technology will ever gain enough market acceptance to become widely used by online shoppers. His answer: “Undoubtedly yes, and for two reasons.”

First, he explained, the new technology will enable people “to do things they never did before. If you’re 100 percent sure that the person who pushed the button at the other end is your customer, there are a whole lot of things you can do, as a merchant, more securely.”

Korman gave the example of online trading firms, that are reportedly losing millions of dollars when some online traders place an order, and then later deny it. A simple password is not enough to prove that a person is who they claim to be, when placing an order over the Internet. Korman believes the iris-scanning technology will be adopted as part of the online payment process because certain merchants will require it in order to reduce fraudulent Internet transactions.

In addition, Korman said that, “Both merchants and consumers will welcome the ability to use ATM cards on the Internet,” particularly because half the population does not own a credit card.

The question still remains in our mind, however, whether individuals who don’t own a credit card will be likely to invest in the hardware and software that will be needed for iris-scanning identification. It seems like an unlikely mix, but time will tell.

About Cash Technologies, Inc. and EMMA

Based in Los Angeles, California, Cash Technologies, Inc. (CTI) develops and markets solutions for coin and currency handling, cash management and consumer e-commerce transactions, including the CoinBank self-service coin deposit machine, the upcoming ATM-XTM multifunction automated teller machine, and the EMMATM e-commerce transaction processing system.

Korman tells the E-Commerce Times that the company has started the certification process for the EMMA system, and expects to complete the process in May. After certification, the company plans some high-profile installations of the system in the third quarter, with licensing to other institutions currently scheduled to begin in the fourth quarter.

About Sensar, Inc.

Sensar Inc. is a privately held company that was founded as a commercial spin-off of the Sarnoff Corporation, formerly RCA Laboratories. The company was formed to leverage Sarnoff’s patented, computer vision technologies and to develop and deploy a virtually fool-proof personal identification system based on the unique patterns of the human iris. Sensar is headquartered in Moorestown, New Jersey.

Sensar was honored in 1998 by Deloitte & Touche, LLP, as one of America’s fastest growing technology companies. Sensar licenses the iris recognition process from IriScan, Inc., of Marlton, New Jersey. IrisScan holds the exclusive worldwide patents on the iris recognition concept.