Major Canadian banks sign on for e-mail fund transfers

Canadians will be able to e-mail each other funds following an agreement between CertaPay Inc. and four of the five largest banks.

Bank of Montreal, TD Canada Trust, Canadian Imperial Bank of Commerce and Scotiabank Wednesday

said they will offer person-to-person fund transfer to their online customers. Toronto-based CertaPay provided the payment engine powering the service.

Once a customers logs into their existing online account at one of the banks, they can specify an amount to be transferred, provide the recipient’s e-mail address and click “”send.”” The amount is immediately deducted from their personal accounts and placed in a holding account. The recipients click the CertaPay Web page attached to the e-mail, enters their information and the fund transaction is completed.

“”It’s effectively just like a money order or a certified cheque. At the end of the day, we notify TD, then TD owes Scotia $100 to clear the transaction,”” explained CertaPay chairman Brad Badeau.

In order to ensure that the e-mail recipient is actually the person the sender intended, a security question preset by the sender must be answered. “”That security question might be, ‘What’s my wife’s first name?’ Something that would establish that you and I know each other,”” said Badeau.

If the e-mail address entered doesn’t exist or bounces back to the sender, he is notified by another e-mail and prompted to cancel the transaction or enter a correct address.

Scotiabank‘s senior vice-president of electronic banking Bob Grant said he’s satisfied with that level of security since it builds on the bank’s existing online security. “”Because it’s with an existing online banking site, you never provide any third party technology company with any financial information,”” he said. “”I know who you are and you’ve signed on with a PIN. You never have to provide account information.””

The e-mail message is essentially notification of the fund transfer rather than a transaction itself, added Badeau. “”A lot of the security that we have is really behind the bank’s firewall. The beauty of the system is that the money never really leaves the Canadian banking system. You don’t have Certapay acting like a quasi bank,”” he said.

For this reason, Scotiabank didn’t have to build an elaborate tracking system to handle the transfers and there is no additional processing required. “”I’m putting an e-mail message into the funds transfer system instead of a paper-based message, but it’s not a big deal,”” said Grant.

He added that e-mail transfers essentially come with the same security and liability levels of ATM banking — provided you follow the instructions and don’t lose your PIN number, you’re safe.

The service does have its limitations, though. The maximum amount that can be transfered is $500 in the case of Scotiabank. Transfers are not immediate, but should occur within about 24 hours. That process may take up to five days if the e-mail recipient does not bank with one of the four insitutions currently covered by the CertaPay agreement.

Grant wouldn’t reveal how many customers he anticipates will use the service, but said market research indicates it would be popular amongst Scotiabank’s 850,000 online users.

Quebec financial institution Desjardin Group has also signed on to adopt the CertaPay solution and Badeau said it may soon be offered in other countries. CertaPay is in discussion with Nyce Corp., a regional ATM network in the United States, and Europay, a European division of MasterCard.

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