Another Rival for NACHA?with an International Flair

Internet payments company Saf-T-Pay Corp. is about to roll out a system that taps consumers' demand-deposit accounts and bears similarities to those being promoted by NACHA?The Electronic Payments Association and tech company MODASolutions Inc. But Miami Beach, Fla.-based Saf-T-Pay says it has an easy-to-use solution that already is gaining credibility with consumers and banks in a region largely overlooked by U.S.-based e-commerce companies, Latin America, because comparatively few consumers there have credit cards. “The [Latin American] marketplace is a lot more robust than people realize,” says Victor Nappe, the chairman of Stored Value Consulting in Fort Lauderdale, Fla., who recently joined Saf-T-Pay's board of advisors. Saf-T-Pay estimates Latin America currently has 50 million online banking customers. In Peru, Saf-T-Pay in late March announced a test of its system with partner bank BBVA Banco Continental, where nearly 400,000 of the bank's 1.1 million customers are enrolled in online banking. The bank is a unit of Spain-based banking giant Banco Bilbao Vizcaya Argentaria, or Grupo BBVA. The BBVA test in Peru included a Mother's Day promotion involving about 1,000 customers who completed 180 transactions, a conversion rate Nappe calls “staggeringly impressive.” About 30 merchants participated, all of which provided deals to the BBVA customers. Three-year-old Saf-T-Pay (for “The Safe Internet Payment System”) speaks from experience when it comes to Latin America. Its chief executive officer is Manuel Montero, a former American Express Co. vice president of Latin American business and AmEx general manager in Spain. Two of Saf-T-Pay's top four other executives and board members also hail from AmEx's Latin American unit, and a third was with AmEx in global operations. The privately held company is funded by an undisclosed number of U.S. and foreign investors, most in the payments industry, according to a Saf-T-Pay spokesperson. Now the company is planning a rollout involving more banks and merchants in Latin America and Europe. The banks include BCP Peru, with a launch scheduled for early August, BAC Central America, with a planned fourth-quarter start time, and a fourth, undisclosed institution in Mexico. The spokesperson also says Saf-T-Pay is in “advanced negotiations” with 12 other leading financial institutions with [a] presence in Peru, Mexico, Brazil, Germany, Switzerland, Portugal, and the U.K.” Saf-T-Pay has about 80 merchants in Latin America and agreements with 60 U.S.-based online retailers in electronics, entertainment, travel, and consumer goods, the company says. It also has an agreement with International Checkout Inc., whose ShopAnyAmericanStore site opens U.S.-based e-commerce sites to Saf-T-Pay customers, the spokesperson says. In Europe the firm has signed agreements with three gateway organizations that Saf-T-Pay says will provide access to 30,000 electronic shops. Saf-T-Pay is trying to differentiate its service for consumers by its ease of use without divulging financial information to the merchant; for e-commerce merchants by its ability to deliver customers who don't have or won't use credit cards for Internet purchases as well as those who want to shop at Web merchants based outside their home countries; and for banks as a source transaction revenue and a tool to strengthen customer relationships. At BBVA, consumers were automatically enrolled in Saf-T-Pay by virtue of being bank customers. When shopping online at a participating merchant, a consumer clicks a Saf-T-Pay icon on the merchant's Web site. Saf-T-Pay provides a local currency quote, a transaction number and expiration time for the merchant to display on the screen and e-mail to the customer. When the consumer approves the order with the merchant, she is directed to her bank's Web site for the final confirmation, but does not need to come back to the merchant site, according to Nappe. Saf-T-Pay, which has applied for patents pending in the U.S. and internationally on its technology and system, then transfers funds from the consumer's bank account to the merchant's. Funds are guaranteed to the merchant. Merchants pay no set-up or recurring fees, but they will pay a percentage-based transaction fee that is lower than bank card interchange, according to Nappe. He would not divulge rates, but says they drop with higher volume. The market for processing online payments is seemingly getting more crowded by the day. It's still dominated by Visa and MasterCard but also includes heavyweights eBay Inc. (PayPal Inc). and Google Inc. (Google Checkout). It also includes or will shortly other systems that rely on online-banking programs to debit funds from consumers' checking accounts, such as MODASolutions' eBillme, NACHA's upcoming Secure Vault Payments, and a planned launch by a Bellevue, Wash.-based startup called Metafos Inc. (Digital Transactions News, June 13). Can Saf-T-Pay catch on? “I'm quite skeptical,” Bruce Cundiff, senior analyst Pleasanton, Calif.-based Javelin Strategy & Research, tells Digital Transactions News via e-mail. “From the merchant perspective, it's another acceptance mark that is not too recognizable, especially compared to Visa, MasterCard, AmEx, or even PayPal.” He also says establishing a network of merchants and banks is “a big uphill battle, and they're far behind other alternatives, not to mention traditional payment types.” Nappe, who was brought in to help in “bridging the gap” between U.S. e-commerce merchants and Latin American and European banks, according to a press release, is undaunted. “There's no reason a bank would not want to do this,” he says. “If we can prove this works in Latin America, we can do it anywhere in the world.”