April 21, 2011
ModaSolutions Corp.’s eBillme bills itself as the cash-based way to pay for online purchases, but the company has put a new twist on its services: electronic gift cards. EBillme this week added a dozen new brands to the approximately 50 merchant brands it was already offering online.
“We’d like to get to about 100 merchants by year’s end,” Samer Forzley, vice president of marketing at Rye Brook, N.Y.-based eBillme, tells Digital Transactions News.
The e-gift card initiative began last October with Amazon.com as the first merchant. Amazon sends customers who can’t pay on Amazon’s site with credit cards to eBillme to complete purchases, according to Forzley. Now eBillme’s gift card partners include the e-commerce affiliates of merchants ranging from Gap, Sierra Trading Post, Buy.com, and Lowe’s to Major League Baseball and Travelocity.
E-gift card payment volumes hit about $1.5 million by January, three months into the program, and eBillme is shooting for $20 million by year’s end, according to Forzley. Users of eBillme can e-mail the electronic cards to friends and relatives or use them themselves as proprietary prepaid cards. “It’s almost taking that gift card infrastructure that’s out here and turning it into a prepaid card,” says Forzley.
EBillme’s main service has about 800 e-commerce merchants. An online shopper selects the eBillme option at checkout and is directed to her bank’s Web site for authentication and transaction approval. Payment comes to eBillme, which guarantees the funds and forwards them to the merchant. Buyers can earn 1% on purchases applied toward future orders. Most merchants pay 1% of the sale to eBillme, though some pay 1.5%. Costs for the e-gift cards vary by merchant but can go into the double digits.
The e-gift initiative could put eBillme in a good position to exploit a new growth market. Late last year, research firm Mercator Advisory Group Inc., which closely follows the prepaid card industry, surveyed the top 100 retailers by revenues as ranked by Stores magazine and found that only 33% offered electronic gift cards on their Web sites. Retailers, however, are showing increasing interest in the product, but configuring their back-office systems to handle the transactions can take time, according to Ben Jackson, senior analyst at Maynard, Mass.-based Mercator.
“E-gift cards are going to reach a tipping point,” Jackson tells Digital Transactions News. “There’s just a few folks offering them now but all of a sudden everybody is going to be offering them.”
The products also are getting a boost from specialty companies and third-party payment processors that offer them to merchants. EBillme recently announced a deal with CashStar Inc., which works with more than 100 retail brands.
EBillme’s e-gift card initiative is not the first major change the company has made in its original model. In September 2009, eBillme began adding another way to pay: at walk-in money-transfer locations. Today, users can pay for online purchases by taking cash to 75,000 U.S. locations that include MoneyGram International Inc. outlets and 7-Eleven Inc. convenience stories, and other locations using the PayXchange service from SoftGate Systems Inc. (formerly IPP of America) or PreCash Inc.’s system. The reason for that? “It’s all about serving the merchant and bringing them the cash customer,” says Forzley.
Walk-in customers take their online order to a participating store and enter a code. In contrast to the online payment service, which is free, walk-in service users pay a $4.95 fee. The transfer service forwards the payment to eBillme, which in turn pays the merchant. Customers also can pay their eBillme bills at major banks, including Bank of America, Chase, Citibank, and Wells Fargo branches.
In February, eBillme announced a deal with Discover Financial Services under which Discover-accepting merchants could offer eBillme to customers through an arrangement that uses the Discover network and a platform offered by Mentor, Ohio-based CardinalCommerce Corp..
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