Annual Field Guide to Alternative Payments

 

Cover Story

Mobile-payment schemes proliferate but innovations abound in all corners of the new world of electronic-payment systems competing for consumer and merchant adoption.

 

By John Stewart, Jim Daly, and Linda Punch

 

 

 

We’re putting on weight. First published in 2009, Digital Transactions’ Field Guide to Alternative Payments debuted that year with 21 entries. Last year’s version had 24, and this year we’re coming in with 35, even after culling a few companies.

 

The main reason for this increase is pretty easy to guess: mobile payments. Payment  card networks, processors, banks, hardware and software providers, specialty tech companies, independent sales organizations and telecommunications firms all have rushed onto the mobile-payments dance floor in the past year. Nobody knows exactly where mobile payments are heading at this very early stage, but the thinking seems to be that wallflowers risk permanent sidelining if they don’t make a move, any move, now.

 

Fueling this interest in mobile-payments is the boom in smart phones, which have far more functionality than older cell phones, the so-called feature phones. These newer devices can make better use of near-field communication (NFC), a technology that could transform a smart phone into a multi-tasking computer and electronic cash register in your pocket. Research firm comScore Inc. recently estimated that 69.5 million Americans carried a smart phone in February, up 13% in just three months. Other researchers predict smart phones will outnumber feature phones this year. Add to those numbers the iPads and other new tablet computers coming into the market, and you have a huge, fertile new field awaiting seeds from payments innovators.

 

Mobile devices are not the only force driving change in electronic payments, of course. Our Field Guide aims to briefly summarize companies that are doing anything notable in developing alternatives to traditional Visa/MasterCard/American Express/Discover card payments online. That broad definition can include the established networks themselves. Our traditional focus on consumer-originated payments remains, though a number of our new entries list mobile-payment systems that enable consumers-turned-entrepreneurs, many of whom are working in their new businesses part time, to accept card payments on smart phones. Nowadays, getting a merchant account isn’t much harder than setting up shop on eBay.

 

Unless otherwise noted, the pricing line item in each profile refers to merchant costs. Sources included company Web sites, information from earnings reports and other filings, media contacts, and Digital Transactions News reports.

 

 

 

 

 

Acculynk/PaySecure

 

Parent: Acculynk Inc.

 

Headquarters: Atlanta

 

Year Founded: 2008

 

Web site: www.acculynk.com

 

2010 Transactions: Not disclosed

 

Pricing: Not disclosed. EFT networks reprice service to merchants.

 

FIELD NOTES  Nine EFT networks (though not necessarily all the banks in those networks) have adopted PaySecure, Acculynk’s technology that allows consumers to make PIN debit transactions on their PCs. Key news includes a decision to introduce a mobile version and pacts with MasterCard Inc. and First Data Corp. to support PaySecure. The technology relies on a so-called floating PIN pad that appears on the screen at checkout to let users enter their PIN.

 

 

 

Amazon Payments

 

Parent: Amazon.com Inc.

 

Headquarters: Seattle

 

Year Founded: 2007  (Amazon Flexible Payments Service)

 

Web site: https://payments.amazon.com/sdui/sdui/index.htm

 

2010 Transactions: Not disclosed.

 

Pricing: 1.9%, 2.2%, 2.5% or 2.9% of the sale, all plus 30 cents, depending on transaction size. Micropayments (below $10): 5% plus 5 cents.

 

FIELD NOTES  The past year was mostly a quiet one for the payments unit of No. 1 online retailer Amazon.com Inc., but given Amazon’s tight-lippedness, an observer should not assume nothing big is brewing. Bloomberg News, citing anonymous sources, reported in early spring that Amazon was interested in near-field communication (NFC) mobile payments. Details were lacking, however, and Amazon refused a Digital Transactions interview request. Amazon in the fall of 2009 introduced a mobile-payments offering for smart phones and last September unveiled the “next generation” version of its core Checkout by Amazon service. Customers can now access their Amazon address book and payment methods directly from a Checkout-accepting merchant’s Web site, streamlining the payment process. Pricing is unchanged. In late March Amazon introduced Checkout in the United Kingdom.

 

 

 

Apple

 

Parent: Apple Inc.

 

Headquarters: Cupertino, Calif.

 

Year Founded: 1976

 

Web site: www.apple.com/

 

FIELD NOTES  NFC mobile payments are suddenly the rage, and the plans or prospective plans of Internet heavyweights Google and Facebook have been the subject of terabytes of speculation. But the buzz around Silicon Valley monarch Apple is even greater, even though Apple has yet to outline a payments strategy. The maker of the iPhone and iPad has done just enough to keep tongues wagging and also is getting a publicity lift from a host of outside companies that have been adding payments utility to its products for several years. Starbucks now enables customers to use electronic bar codes on iPhones to pay for their lattes, and several companies as well as some independent sales organizations and small software firms have come out with applications that turn the iPhone and iPad into mobile card-accepting terminals. (Many payment apps now work on the Android, BlackBerry or Windows Mobile systems, but Apple has gotten most of the glory.) In 2009 Apple filed a raft of NFC-related patent applications and last summer hired an NFC expert, Benjamin Vigier, from mFoundry.

 

All of that generated buzz early this year that something was imminent from Apple. The company, however, put the kibosh on speculation that the upcoming iPhone 5 would be equipped with NFC, citing, according to press reports, the current lack of industry standards. Something could emerge from Cupertino in 2012, and whenever it does, watch out.

 

 

 

AprivaPay

 

Parent: Apriva Inc.

 

Headquarters: Scottsdale, Ariz.

 

Year Founded: 2010

 

Web site: www.apriva.com/

 

2010 Transactions: N.A.

 

Pricing: Merchant pricing set by resellers.

 

FIELD NOTES  Coming from its background as a specialty provider of wireless payment products and data security, Apriva is carving a niche for itself in the mobile sector and in wireless transactions from remote merchant terminals, notably vending machines. The company’s product for on-the-go merchants using mobile phones as card-accepting terminals is AprivaPay, which runs on the major mobile-phone operating systems and is accessible via the phone’s browser or as a downloadable application. Apriva aims the service at merchants that don’t want to pay for a specialized terminal. (Apriva offers those, too.) One of Apriva’s key differentiators is its extensive network of resellers that ranges from small processors up to the top merchant acquirers and includes AT&T, which offers Apriva services to small businesses. In March, the big independent sales organization EVO Merchant Services introduced its EVO Mobile Pay service for the iPhone, which is built on AprivaPay software. A version running on Google Inc.’s Android platform is planned for the near future.

 

 

 

Billing Revolution

 

Parent: Billing Revolution Inc.

 

Headquarters: Seattle

 

Year Founded: 2007

 

Web site: www.Singleclickcheckout.com

 

2010 Transactions: Not disclosed.

 

Pricing: 15 cents or less per transaction.

 

FIELD NOTES  Billing Revolution, a one-click mobile-payment system that directs charges to users’ credit cards, received a boost in November 2010 when financial-services giant Citigroup Inc. became a major sponsor of its proprietary Single-Click Checkout service.  Citi branding is integrated with Billing Revolution’s pop-over application and on the Single-Click Checkout Web site.  Single-Click Checkout enables customers to conduct credit card purchases with their mobile devices from any Web- or mobile-based merchant worldwide without entering a user name and password. The Single-Click Checkout application is available for Android in the Google Marketplace.  The app is compliant with the Payment Card Industry data security standard (PCI). Billing Revolution is one of a group of startups trying to build mobile-payments businesses that don’t rely on new technologies like near-field communications (NFC).

 

 

 

Bill Me Later

 

Parent: eBay Inc.

 

Headquarters: San Jose, Calif.

 

Year Founded: 2000

 

Web site: www.billmelater.com

 

2010 Transactions: $1.27 billion

 

Pricing: Standard merchant fee is 2% plus 15 cents. Promotional credit programs, such as six months same as cash, carry extra fees.

 

FIELD NOTES  Bill Me Later offers what has become known in the online-payments business as transactional credit, or an on-the-spot advance to consumers who want to consummate an online transaction. Funding comes from WebBank, which replaced CIT Bank in September. Included in the PayPal wallet in 2009, Bill Me Later became increasingly available as a payment method on parent eBay’s massive online marketplace in 2010. Deepening the integration of PayPal and Bill Me Later, eBay has combined the merchant-sales units of the two payments properties.

 

Net chargeoffs improved markedly in 2010, dropping from 11.14% in the fourth quarter of 2009 to 6.07% a year later. While Bill Me Later doesn’t technically extend credit (that’s where the partner bank comes in), it buys the receivables and takes responsibility for credit risk.

 

 

 

BilltoMobile

 

Parent: Danal Co. Ltd.

 

Headquarters: San Jose, Calif.

 

Year Founded: 2010

 

Web site: www.BilltoMobile.com

 

2010 Transactions: Not disclosed

 

Pricing: About 15% of the transaction.

 

FIELD NOTES  BilltoMobile, an e-commerce payments service that allows consumers to make a purchase and bill it directly to their cell phone bill, in 2010 launched its service with Verizon Wireless and AT&T via its proprietary Direct Mobile Billing (DMB) service. BilltoMobile also has signed an agreement to operate Sprint’s mobile-payments gateway. The mobile carriers have a combined subscription base of about 240 million subscribers. The company’s Korean majority stock holder, Danal Co. Ltd., pioneered direct mobile billing, with 14 mobile carriers in Korea, Taiwan, and China, and more than 10,000 online merchants. BilltoMobile launched in the U.S. with merchants including Nexon, Perfect World, NHN, and Gamespot. The service has direct real-time billing connections into the telecom carriers’ billing, customer service, authentication, and processing systems. The company claims it can offer mobile-payment service to U.S. merchants at rates in the 15% to 17% range, compared with the 40% to 50% charged by other services.

 

 

 

Bling Nation

 

Parent: Bling Nation Ltd.

 

Headquarters: Palo Alto, Calif.

 

Year Founded: 2007

 

Web site: www.blingnation.com

 

2010 Transactions: Not disclosed

 

Pricing: 1.5%.

 

FIELD NOTES  Two big developments for Bling are its tie-in with PayPal and its FanConnect service. Now anybody with a PayPal account can fund a Bling transaction, not just Bling users. And FanConnect lets users broadcast their deals, prices, and other transaction details to their friends via Facebook when they check out, with merchants adding incentives of their own to get those friends in the store. That opens Bling to merchants that may want Bling readers for their promotional capability but not for payments. Bling transactions are contactless, with users waving a mobile phone with a sticker near a reader, or “Blinger,” to complete payment or to check out using FanConnect.

 

 

 

Boku (Paymo)

 

Parent: Boku Inc.

 

Headquarters: San Francisco

 

Year Founded: 2009

 

Web site: www.boku.com and  www.paymo.com

 

2010 Transactions: Not dislosed.

 

Pricing: Reportedly under 10% per transaction.

 

FIELD NOTES  Boku in January signed an agreement to process payment transactions through the BilltoMobile Direct Mobile Billing (DMB) payment service, which is directly connected to the Verizon Wireless billing system. Boku concentrates on digital downloads, an estimated $8 billion market among video-game and social-network sites. Boku’s mobile-payments platform is live in 65 countries worldwide across 230 carriers, with direct billing connections to carriers around the world including AT&T in the U.S., Vodafone in the United Kingdom, and Globe in the Philippines. Among Boku’s featured merchants are Facebook, Aeria Games, Electronic Arts, Playdom, and Zoosk. The mobile service, branded Paymo for customers and Boku for publishers, works on PCs or via the mobile Web. To use Boku, the consumer types his mobile-phone number into a field that appears in the merchant’s checkout page. Boku sends back a text message asking for confirmation, and if the consumer responds by texting a “Y” for “yes,” the transaction is done. The payment will then appear on the consumer’s mobile-phone bill.

 

 

 

ChargeSmart

 

Parent: ChargeSmart Inc.

 

Headquarters: San Francisco

 

Year Founded: 2008

 

Web site: www.chargesmart.com

 

2010 Transactions: 255,000; $82 million in dollar value

 

Pricing: 2.29% plus $4.95 except for payments to billers that accept Visa, in which case a flat fee is charged. Fees are charged to consumers, not billers.

 

FIELD NOTES  ChargeSmart, which its founders started out of frustration at not being able to use credit cards to make mortgage and car-loan payments, has been on a roll. Total payment volume will hit $160 million this year, it projects. The company lets consumers pay big-ticket obligations with a card online, for a fee. As ChargeSmart officials point out, since it is one of the few alternative players to charge consumers rather than merchants, any debit card fee reductions from the Durbin Amendment will benefit its 300,000-plus users as the company passes the lower costs on to them. There’s a sound business basis for this. ChargeSmart says tests confirm any reduction in price will generate an increase in consumer adoption out of proportion to the price cut.

 

 

 

eBillme

 

Parent: MODASolutions Corp.

 

Headquarters: Rye Brook, N.Y.

 

Year Founded: 2005

 

Web site: www.ebillme.com

 

2010 Transactions: N.A.

 

Pricing: 1% or 1.5% of the transaction.

 

FIELD NOTES  Launched as a cash-based way for consumers to pay e-commerce merchants through their online-banking sites, eBillme has been adding options and expanding distribution. The company, which says it has more than 800 online merchants, began offering electronic gift cards from Amazon.com late last year. It now offers e-gift cards from about 50 retailers and hopes to double that count by year’s end. Buyers pay through their online-banking program or at 75,000 U.S. walk-in locations that include 7-Eleven stores and MoneyGram wire-transfer outlets. EBillme began adding walk-in locations in September 2009. Gift card transactions run on several platforms, with many cards serviced through CashStar Inc., a technology firm specializing in digital gift cards and incentives. In February, eBillme announced an agreement with Discover Financial Services that enables Discover merchants to offer eBillme as a customer payment option through CardinalCommerce Corp.’s Cardinal Centinel platform.

 

 

 

eLayaway

 

Parent: eLayaway Inc.

 

Headquarters: Tallahassee, Fla.

 

Year Founded: 2006

 

Web site: www.elayaway.com

 

2010 Transactions: Not disclosed

 

Pricing: Monthly service fee of $9.99 plus additional fees ranging from $20 to $150 depending on dollar volume of completed orders. Consumer pays a fee starting at 1.9% of the transaction ticket.

 

FIELD NOTES  eLayaway in March expanded its service into the physical world with the release of the eLayaway Virtual Terminal, a brick-and-mortar version of its online layaway application. The Virtual Terminal allows physical-world retailers, telemarketers, and home-service/repair technicians to offer, manage, and automate layaway programs. The Virtual Terminal builds upon eLayaway’s existing online layaway-management application, allowing merchants to create and manage layaway from any location, including retail locations, kiosks, or at the home of the consumer. Similar to the online version of eLayaway, once an order has been placed on layaway, Virtual Terminal automatically drafts the payments from the consumer’s funding preference (checking account via ACH, debit cards, and stored-value cards). Shoppers can pick up the merchandise once it is fully paid for. eLayaway in March also launched a Spanish version of the service—eApartado.com. The site uses eLayway’s existing network of merchants and affiliates.

 

 

 

Facebook Credits

 

Parent: Facebook

 

Headquarters: Palo Alto, Calif.

 

Year Founded: 2004

 

Web site: www.facebook.com/help/?page=1038

 

2010 Transactions: N.A.

 

FIELD NOTES  You’ve certainly heard of e-commerce and m-commerce, but now payments and Internet retailing executives are talking about “F-commerce,” as in Facebook Credits, the virtual currency of the giant social network Facebook. Members can use Facebook Credits to buy digital goods and services, including the 350-plus games and applications from third-party developers on the Facebook platform. Application developers must now pay 30% of their sale price to Facebook for the privilege of getting access to more than 500 million network members worldwide, a policy many developers aren’t happy about. But so strong is Facebook’s gravitational pull that Wal-Mart, Target, and Best Buy offer Facebook Credits gift cards, and even American Express offers them as rewards points, according to Investors Business Daily. Warner Bros. Digital Distribution now accepts them for movie purchases and rentals. Facebook is requiring third-party app developers to phase out payment options other than Credits, according to reports in the tech press. Facebook members can pay for Facebook Credits with a credit card, PayPal, or charge them to a mobile-phone account.

 

But does Facebook have grander designs on payments beyond Facebook Credits in their current form? Facebook isn’t offering answers, only infrequent but tantalizing clues. In recent months, Facebook established a wholly owned subsidiary called Facebook Payments Inc. and installed a number of its top executives as directors. A spokesperson told Digital Transactions News in March only that the new unit “helps handle payments to developers related to our Facebook Credits program.” Some outside payments executives, however, see the subsidiary as potentially taking Facebook Credits to the physical point of sale.

 

 

 

FaceCash

 

Parent: Think Computer Corp.

 

Headquarters: Palo Alto, Calif.

 

Year Founded: 2010

 

Web site: www.facecash.com

 

2010 Transactions: Launched in May 2010

 

Pricing: 1.5%.

 

FIELD NOTES  FaceCash allows consumers to pay merchants by displaying photos of themselves along with unique, identifying bar codes. During the sign-up process, the consumer submits a photo of herself. This photo appears on her phone screen and on the cashier’s PC screen when she’s at the store ready to pay for her goods. Also appearing on the screen is a bar code that further identifies the user and links her transaction details to her account. Merchants can use their existing bar-code scanners or buy one from Think Computer for $30. Think’s software, known as ThinkLink, is made available to the merchant at no charge. To further authenticate accounts, first-time users must also show merchants a driver’s license with a photo.

 

FaceCash, which also enables person-to-person payments using the “bump” technology PayPal Inc. uses, has no charge for consumer accounts and offers features such as detailed transaction records and the ability to split tabs among multiple people. Once a consumer has signed up for an account, she can fund it by transferring money from her checking or savings account. Transfers are processed via the low-cost automated clearing house network. Card funding is not allowed for cost reasons. The latest twist: FaceCash Register, a free, Web-based POS system for merchants.

 

 

 

Global Standard Financial

 

Parent: Global Standard Financial Inc.

 

Headquarters: Alpharetta, Ga.

 

Year Founded: 2006

 

Web site: www.gsf-inc.com

 

2010 Transactions: Not available

 

Pricing: Not available.

 

FIELD NOTES  Image exchange gets rid of paper in the checking system after the checks get to the bank. GSF has patents on technology that will get rid of it altogether, allowing consumers and businesses to “write” a “check” on a PC or mobile phone and send it to a merchant or other payee, who in turn simply deposits the electronic item as it would any other check image. GSF has been quiet in recent months, but its technology has the potential to finally do away with the last vestige of paper in the checking system—at the point when the checks are actually written.

 

 

 

Google Checkout

 

Parent: Google Inc.

 

Headquarters: Mountain View, Calif.

 

Year Founded: 2006

 

Web site: www.google.com/checkout

 

2010 Transactions: Not disclosed

 

Pricing: (based on monthly volume)  <$3,000: 2.9% plus 30 cents;  $3,000-$9,999.99: 2.5% plus 30 cents; $10,000-$99,999.99: 2.2% plus 30 cents; $100,000 and up: 1.9% plus 30 cents.

 

FIELD NOTES  Launched amidst much ballyhoo five years ago, Google Checkout remains a distant second to eBay’s PayPal Inc., the first successful alternative payment method. Google Checkout accounted for about 9% of merchant market share in 2010, compared with PayPal’s 78%, according to a recent study from Javelin Strategy & Research. The search-engine giant is tightlipped about its online wallet, releasing information primarily through a blog on the Google Checkout site. It recently announced that Google Checkout is available to users of Google Apps, a suite of cloud-based messaging and collaboration apps, including Gmail, spreadsheets, and documents. Google’s major method of promoting the use of Checkout appears to be partnering with merchants for holiday promotions. During the 2010 holiday season, Google marketed the promotion through AdWords ads, e-mails to buyers, and postings on social networks. Google offered to participating merchants a special promotional Checkout button featuring an orange starburst labeled with the promotion discount.

 

 

 

Intuit GoPayment

 

Parent: Intuit Inc.

 

Headquarters: Mountain View, Calif.

 

Year Founded: 2009

 

Web site: gopayment.com

 

2010 Transactions: 116 million (total Intuit payment services)

 

Pricing: Low volume (generally below $1,000 in monthly charges): 2.7% plus 15 cents (card present), 3.7% plus 15 cents (card not present) for Visa, MasterCard, Discover and JCB cards; different rates for American Express. Higher volumes: 1.7% plus 30 cents (card present), 2.7% plus 30 cents (card not present) for most brands, different rates for AmEx; $12.95 monthly fee.

 

FIELD NOTES  GoPayment is the service accounting-software maker Intuit Inc. rolled out in 2009 to crack the growing market of consumers-turned-entrepreneurs who need to accept payment cards outside of the office or store yet don’t want to buy expensive, specialized equipment. With GoPayment, all the budding merchant needs is Intuit’s sleeve that fits on an iPhone, along with the software and an Intuit merchant account. Intuit has thus thrust itself into a market that includes terminal heavyweight VeriFone with its PAYware Mobile line, Square, and a host of ISOs and some software providers. But Intuit is no babe in these dangerous woods; its quiver includes extensive experience as an ISO owner itself with 300,000 merchants as well as QuickBooks, the leading accounting program for small businesses. Merchants don’t need to buy QuickBooks to get GoPayment, but payment data flow into the program seamlessly. Intuit said GoPayment had generated $80 million in charge volume from its launch to January 2011.

 

 

 

Isis

 

Parent: AT&T/Verizon Wireless/T-Mobile USA

 

Headquarters: New York City

 

Year Founded: 2010

 

Web site: www.paywithisis.com/

 

2010 Transactions: Under development

 

Pricing: N.A.

 

FIELD NOTES  Against very tough competition, Isis might have won the Most Mysterious Mobile Payment System of the Year Award had anyone offered it. Telecommunications carriers AT&T, Verizon, and T-Mobile announced creation of their Isis joint venture for mobile payments using near-field communication (NFC) technology last year but said virtually nothing about it for months afterward. The initial partners are Barclaycard USA for account issuance and Discover Financial Services for transaction routing, though neither company has an exclusive deal. In April, Isis revealed its first merchant: the Salt Lake City-based Utah Transit Authority. That was a logical choice as the UTA is the only major transit agency in the country that accepts general-purpose contactless cards systemwide. At about the same time, Bloomberg News reported that Sprint Nextel Corp., which had been an original partner in Isis but dropped out last year, is now pursuing its own mobile-payments plans. Another press report said Isis’s next market would be Austin, Texas, though Isis would not confirm that. Isis is definitely getting in gear, however. Its Web site in mid-April listed nearly 40 open positions in technology, marketing, sales, operations, and finance.

 

 

 

Mazooma

 

Parent: Mazooma Inc.

 

Headquarters: Miami Beach, Fla.

 

Year Founded: 2007

 

Web site: www.mazooma.com/merchant

 

2010 Transactions: Not disclosed

 

Pricing: 1% plus 15 cents for highest-volume merchants.

 

FIELD NOTES  Launched two years ago, Mazooma continues to sign new merchants, including major online retailers CSN Stores LLC, a home-furnishings retailer; eTronics, a retailer of consumer electronics, home appliances, and personal-care products; and Stacks and Stacks, a retailer of housewares and storage and organizational products. Mazooma is among an increasing number of services that allow consumers to pay online merchants by debiting their checking accounts through their online-banking programs. To use Mazooma, shoppers choose the direct-debit payment option at checkout. The shopper then creates an account, using a password and date of birth. Once he signs into his online-banking account, he approves the online bill payment to complete the purchase. Funds are wired to a Mazooma-holding account, with next-day settlement to merchants. Fourteen banks, including Bank of America N.A., JPMorgan Chase & Co., and Citibank, participate in the Mazooma program.

 

 

 

MobilePay USA

 

Parent: Universal Commerce Inc.

 

Headquarters: Aliso Viejo, Calif.

 

Year Founded: 2010

 

Web site: www.mobilepayusa.com

 

2010 Transactions: Founded May 2010, began operations in the fall.

 

Pricing: 1% plus 25 cents, on top of ordinary discount fees, though the fee can slide down with volume.

 

FIELD NOTES  Emerging from stealth mode only last fall, this is another alternative to near-field communication technology. With MobilePay USA, a consumer who’s ready to check out in a participating store can have the store appear on his phone via geo-location. The customer touches a “pay store” button, enters a four-digit PIN and the amount to pay, and then confirms the transaction by touching a “pay now” button. The authorization appears simultaneously on the phone as well as on the merchant’s point-of-sale terminal, and transactions are charged to credit, debit, or loyalty card accounts that are not stored on the phone. Unlike with NFC, merchants are not required to install contactless readers or other software and consumers do not need special wallet software on their phones.

 

 

 

Mocapay

 

Parent: Mocopay Inc.

 

Headquarters: Denver, Colo.

 

Year Founded: 2006

 

Web site: www.mocapay.com/mca/home.html

 

2010 Transactions: Not disclosed

 

Pricing: Not disclosed.

 

FIELD NOTES  Mocapay, an online and physical point-of-sale payment service built on prepaid accounts linked to mobile phones, in August formed a strategic partnership with eNational Payments. ENational is a provider of mobile and contactless e-commerce and payment processing services, including check warranty and back-office conversion. Mocapay has attempted to grow its business through ties to loyalty and gift card providers, whose users can build rewards balances through Mocopay, and by forging distribution deals with vendors, merchants, and other organizations. The company previously had struck deals with point-of-sale terminal maker VeriFone Systems Inc. and Micros Retail Systems Inc., a specialty POS vendor for the hospitality industry. Mocapay users get a one-time code when paying for goods, which the user gives to a cashier or types into an online checkout page. ENational Payments is a registered ISO for Wells Fargo Bank N.A.

 

 

 

mPayy

 

Parent: mPayy Inc.

 

Headquarters: Chicago

 

Year Founded: 2007

 

Web site: www.mpayy.com

 

2010 Transactions: Not disclosed

 

Pricing: 2% plus 20 cents.

 

FIELD NOTES  New initiatives for this Windy City mobile player include a donation service, launched in February, and a contactless card for mass-transit fares. The latter leverages mPayy’s experience with micropayment processing and will link to prepaid accounts as well as to general-purpose card accounts. “A lot of people who ride mass transit don’t have a bank account,” says chief executive Conrad Sheehan. His company is pitching the Washington, D.C., mass-transit authority. For donations, mPayy offers a single-click service that lets donors send $1 to the featured non-profit, with a new charity appearing every day. The new service was a hit in the wake of the March earthquake/tsunami disaster in Japan, Sheehan says. Mpayy relies on the ACH for settlement.

 

 

 

Noca

 

Parent: Noca Inc.

 

Headquarters: Mountain View, Calif.

 

Year Founded: 2007

 

Web site: www.noca.com

 

2010 Transactions: Not disclosed

 

Pricing: 0.99% of transaction.

 

FIELD NOTES  Founded by former Visa Inc. executives, Noca positions itself to merchants as a low-cost alternative to credit and debit cards. The company has largely been absent from the news pages since February 2009, when it launched a beta version of an online payment product that relies on the automated clearing house network. With Noca’s Secure Check service, consumers pay by authorizing a merchant to pull funds from their accounts via the ACH, much as they do with online bill payments at biller sites. With the first transaction, the consumer fills in the routing-and-transit and checking-account numbers from a check. On subsequent transactions, the system recalls these data and fills it in automatically. Name and shipping address are automatically prefilled from the merchant’s checkout page.

 

 

 

Obopay

 

Parent: Obopay Inc.

 

Headquarters: Redwood City, Calif.

 

Year Founded: 2005

 

Web site: www.obopay.com/consumer/welcome.shtml

 

2010 Transactions: Not disclosed

 

Pricing: Sending $10 or less: 25 cents; $10+: 50 cents; receiving money: free; account load from credit or debit card account: 1.5%, fee waived if from bank account.

 

FIELD NOTES  Obopay in May 2010 raised its U.S. market profile with the launch of Mobile Money for Banks. A white-label service, Mobile Money enables consumers to accept payment cards. Obopay will charge client banks, which will put their own brands on the service, a per-transaction fee varying by volume, with banks setting retail pricing. The “Get Paid by Obopay” component of Mobile Money for Banks enables small businesses and even individuals to accept debit card or automated clearing house payments from anyone, with funds moved directly into the recipient’s bank account. The “Mobile P2P by Obopay” service enables bank customers to send money from a bank account to anyone by using a signature or PIN debit card. For PIN debit card-funded transactions, Obopay is working with the Star, NYCE, and Pulse EFT networks, which offer services enabling cardholders to bypass PIN-entry for online debit card transactions. Obopay’s U.S. service is designed for smart phones, including the Blackberry and iPhone, and uses text messaging, online, and telephone-based communications, depending on the client’s wishes.

 

 

 

PayPal

 

Parent: eBay Inc.

 

Headquarters: San Jose, Calif.

 

Year Founded: 1998

 

Web site: www.paypal.com

 

2010 Transactions: 1.45 billion  (includes Bill Me Later volume)

 

Pricing: (merchant rate on monthly volume)

 

Up to $3,000 2.9% plus 30 cents

 

$3,000.01-$10,000 2.5% plus 30 cents

 

$10,000.01-$100,000 2.2% plus 30 cents

 

Greater than $100,000 1.9% plus 30 cents.

 

FIELD NOTES  PayPal, which started out as a way of transferring money between PDAs but quickly switched to e-commerce, has finally begun to realize its ambition to go mobile. Total transaction volume via mobile devices grew to $750 million last year, quintupling 2009’s $141 million. The processor has also seen its open-platform initiative, launched in November 2009, attract a swarm of developers and yield a host of benefits, including a person-to-person payment service for banks and an entrée into physical-world payments via partners like Bling Nation. Once the scourge of the banking business, PayPal is now talking to financial institutions and payment networks about processing p2P transactions for them. Its latest recruit: Discover.

 

 

 

PAYware Mobile

 

Parent: VeriFone Systems Inc.

 

Headquarters: San Jose, Calif.

 

Year Founded: 2009

 

Web site:

 

2010 Transactions: N.A.

 

Pricing: VeriFone pricing to resellers not disclosed. Acquirers/processors set merchant pricing. VeriFone suggests the following rates. Low-volume merchants (less than $1,500 in monthly sales): 2.75% of the sale plus 15 cents; no monthly fee; $99 for encryption sleeve with no commitment. Regular merchants: 1.65% plus 20 cents; $19.99 monthly fee; $29 activation fee but card sleeve free with two-year commitment.

 

FIELD NOTES  PAYware Mobile is a key part of No. 1 U.S.-based terminal maker VeriFone’s sprawling effort to generate new, non-hardware revenues. Like Intuit’s GoPayment, AprivaPay, Square, and offerings from some ISOs and software companies, PAYware Mobile is software for the iPhone (versions for other smart phones are coming soon, VeriFone promises) that enables not only budding entrepreneurs to accept cards, but also established merchants that want to add a mobile component. The service includes a data-encrypting card-swipe sleeve that fits around the iPhone. VeriFone has a lot of ingredients in its mobile-payments secret sauce, including sale of the sleeve at Apple’s popular retail outlets and reselling agreements with major acquirers and processors such as First Data, U.S. Bancorp, Global Payments, WorldPay, and Chase Paymentech. Transactions come into VeriFone’s PAYware Connect gateway, generating fee revenue for VeriFone. And VeriFone and PayPal have formed a mutual-aid society of sorts, with PayPal to offer PAYware Mobile to its merchants and VeriFone adding PayPal acceptance to its mobile app.

 

 

 

Popmoney

 

Parent: CashEdge Inc.

 

Headquarters: New York City

 

Year Founded: 1999

 

Web site: www.cashedge.com/

 

2010 Transactions: N.A.

 

Pricing: Transaction-based charge to financial institutions, which set retail pricing.

 

FIELD NOTES  Through recent deals with major industry players, CashEdge’s person-to-person payments product, Popmoney, has emerged as a serious rival to PayPal’s P2P service. In February, CashEdge announced that the NYCE electronic funds transfer network would offer Popmoney to its bank and credit-union clients. Transactions on EFT networks happen in real time, which could make Popmoney more attractive to consumers who might think speeds on the automated clearing house network, CashEdge’s main transaction highway, are too slow. CashEdge followed up in March with an agreement with Visa Inc. that will enable a Visa cardholder to send P2P payments to another Visa cardholder using the Popmoney system. At the same time, Visa announced a similar deal with the big bank processor Fiserv Inc., whose ZashPay P2P service has 700 financial-institution clients compared to Popmoney’s approximately 200. CashEdge says deals with more networks are planned.

 

 

 

Rialto Commerce (formerly Moneta)

 

Parent: Rialto Commerce

 

Headquarters: Atlanta

 

Year Founded: 2006

 

Web site: https://www.rialtocommerce.com/corp/index.aspx

 

2010 Transactions: Not disclosed

 

Pricing: Not disclosed.

 

FIELD NOTES  Nearly five years after its launch, alternative payments processor Moneta Corp. changed its company name to Rialto Commerce. The rechristened company is offering a suite of e-commerce payment services, beginning with Rialto Pay, an online-payment wallet distributed to consumers through its bank partner network. The RialtoPay merchant network includes top Internet retail sites such as ShoeBuy.com, Stacks and Stacks, and Delta Air Lines. Strategic partners include CardinalCommerce and Universal Air Travel Program. Rialto allows consumers to pay online merchants with automated clearing house debits, enrolling users through partnerships with banks. Consumers signing up for Rialto Pay submit their checking or money market account information to Rialto Commerce. They can directly debit online purchases from their accounts without having to reveal their financial information to the merchant. The company also offers transactional credit.

 

 

 

Secure Vault Payments

 

Parent: Sponsored by NACHA, the regulatory body for the automated clearing house network; switch operated by eWise Systems USA Inc.

 

Headquarters: Herndon, Va.

 

Year Founded: 2008

 

Web site: www.securevaultpayments.com

 

2010 Transactions:  Emerged from pilot in September

 

Pricing: 1.35% for merchant transactions, 50 cents for bill payments, 40 cents for government agencies, payable by acquiring banks; plus separate switch fee of up to 6 cents, payable by both acquiring and authorizing bank; plus fee to NACHA of 1 cent, payable by authorizing and acquiring bank; final merchant pricing set by acquiring banks.

 

FIELD NOTES  Now available as a commercial service after a long period of gestation, SVP is wasting no time. Its latest gambit is to go mobile, with a pilot planned for the fall and a commercial service envisioned by year’s end. The mobile service will let consumers pay billers, online sellers, and physical-world retailers and will rely on bar codes displayed on bills or computer screens, rather than near-field communication, to trigger payments. The app comes from Denver-based eWise, which runs SVP’s switch and handles marketing for the service, and will be supplied to consumers through participating banks. Consumers who select SVP at checkout pay through their online-banking program, with settlement via the ACH and guaranteed funds to merchants.

 

 

 

Serve

 

Parent: American Express Co.

 

Headquarters: New York City

 

Year Founded: 2011

 

Web site:

 

Pricing: 2.9% plus 30 cents for account loading; $2.00 for ATM withdrawals after first monthly withdrawal; merchant discount rate slightly lower than regular AmEx discount rates.

 

FIELD NOTES  It seemed like the Revolution Money startup went dark after American Express bought it in 2010, but AmEx turned on the lights this March when it introduced Serve, a multifaceted payments business built on Revolution’s platform. Serve includes a digital account and prepaid card that enables users to shop online, make person-to-person payments, and spend at any merchant location that accepts American Express cards. Serve has an iPhone app and is working on one for the BlackBerry. AmEx expects Serve to generate incremental transaction volume by attracting users who now mainly use cash or debit cards and avoid credit and charge cards, the latter two being AmEx’s core products. Users can fund accounts not only by debiting checking accounts through the automated clearing house, but also with any major-brand credit card, not just AmEx cards. AmEx also is bringing in outside companies such as Ticketmaster to develop Serve promotions, and it has created software apps called widgets that enable Serve users to make charitable donations. In April, a small mobile-payments provider, Payfone Inc., announced a $19 million funding round with AmEx as the lead investor and which included affiliates of Verizon, BlackBerry maker Research in Motion Ltd., and Canadian wireless telco and media company Rogers Communications. AmEx will integrate Payfone’s mobile-authorization and payment system into Serve so that Serve account holders can make purchases using their mobile-phone numbers.

 

 

 

Square

 

Parent: Square Inc.

 

Headquarters: San Francisco

 

Year Founded: 2009

 

Web site: https://squareup.com/

 

2010 Transactions: N.A.

 

Pricing: 2.75% for swiped transactions; 3.5% plus 15 cents for key-entered sales.

 

FIELD NOTES  With Twitter co-founder Jack Dorsey as its chief executive, no payments company has more star power than Square, which gives its users a small, cube-shaped reader that plugs into their mobile device so that they can accept credit and debit cards. Like Intuit, Apriva, VeriFone, and some ISOs, Square is pursuing micro-merchants and bigger ones that want to accept payments with smart phones and tablet computers. After much hype, Square went live last year with an application for Apple’s iPad, then the iPhone and most recently Android-based mobile devices. Square has survived equipment shortages, bugs in its underwriting process, a mocking YouTube video, and a scathing attack by VeriFone, which questioned Square’s security. Plus, Dorsey is returning to Twitter, though he insists he’ll remain Square’s boss. But Square is making its presence felt. It has cut its discount rate for card-present sales, pressuring competitors, and in early March was generating $1 million a day in charge volume. Next: reportedly, cube sales at Apple stores.

 

 

 

Tempo Payments

 

Parent: Tempo Payments Inc.

 

Headquarters: San Mateo, Calif.

 

Year Founded: 2001

 

Web site: www.tempo.com

 

2010 Transactions: Not disclosed

 

Pricing: Not disclosed.

 

FIELD NOTES  Specialty debit-card processor Tempo Payments, which found a niche among charitable organizations and non-profits, is beginning to expand beyond its core merchant base. In November, Tempo signed as a merchant Sheetz Inc., a convenience-store chain with more than 380 locations in six states. The Sheetz Rewards Debit Cards are issued by Tempo partner First Bank & Trust of Brookings, S.D., and can be used everywhere Discover cards are accepted. Earlier, Tempo announced that Direct Checks Unlimited, the nation’s largest direct-to-consumer check provider, is using Tempo’s affinity debit card platform to provide a nationwide debit rewards card through its Checks Unlimited brand. The new Special Edition Discover debit cards link to consumers’ existing checking accounts. First Bank & Trust of Brookings also is issuer of the Direct Checks card. Tempo sets up and processes PIN-protected proprietary and Discover-branded debit programs that offer rewards for usage and lets cardholders tap checking accounts they keep at any bank.

 

 

 

ZashPay

 

Parent: Fiserv Inc.

 

Headquarters: Brookfield, Wis.

 

Year Founded: 2010

 

Web site: www.zashpay.com/pcw411/wps?sp=12750&rq=home

 

2010 Transactions: N.A.

 

Pricing: N.A.

 

FIELD NOTES  Fiserv’s long list of financial-institution clients, about 3,100, provided a big lift to the processor’s new ZashPay person-to-person payments service in 2010’s second half. Some 400,000 customers had registered with ZashPay by October, just three months after the service launched. Customers access ZashPay through their online-banking sites. As of March, more than 700 banks and credit unions had signed up to offer the service, and it was already live at 500. Like CashEdge, Fiserv is working with Visa to facilitate P2P payments between Visa cardholders. And also like CashEdge, Fiserv is soon expected to route P2P transactions over electronic funds transfer network rails, likely the Fiserv-owned Accel/Exchange network. That option could enhance ZashPay’s appeal because EFT transactions clear in real time rather than the day or two it takes with the ACH. PayPal remains the big man on the P2P campus, but ZashPay is a freshman to watch.

 

 

 

Zong

 

Parent: Echovox Inc.

 

Headquarters: Palo Alto, Calif.

 

Year Founded: 2008

 

Web site: www.zong.com

 

2010 Transactions: Not disclosed

 

Pricing: 5%-8% of sale.

 

FIELD NOTES  Zong in March expanded its platform, enabling mobile payments to more application platforms and remote devices. Zong leverages parent company Echovox’s direct connections to more than 100 mobile carriers internationally to enable payment for digital goods and downloads on mobile devices. At checkout, the users types in his cell-phone number and receives a confirmation request to his phone. Once he texts confirmation, the transaction is booked and the customers sees a charge on his mobile-phone bill.

 

 

 

Zumogo

 

Parent: ProPay Inc.

 

Headquarters: Lehi, Utah

 

Year Founded: 2011

 

Web site: www.propay.com

 

2010 Transactions: Became operational early 2011

 

Pricing: Card-not-present interchange included in merchant pricing, plus a monthly service fee, which is being tested.

 

FIELD NOTES  Known primarily as an independent sales organization, ProPay early this year introduced a mobile-payments app called Zumogo. The new app, which is free to consumers, lets a smart-phone user bring up a list of all participating merchants in his vicinity. With the app’s “announce” button, the user can send and receive text messages to and from those merchants and order and pay for products for pick up later. Unlike near-field communication, the Zumogo app works anywhere in or outside the store. It also differs from NFC also in that it does not store a consumer’s e-wallet anywhere on the mobile phone.

 

First-time users of the app can enter credit card, debit card, and checking-account data for upload to ProPay’s servers via a Secure Sockets Layer (SSL) connection. After uploading his payment data, the user selects which account he wants to pay from, and ProPay processes the transaction. Versions of the app are available for phones running Google Inc.’s Android and Apple Inc.’s iOS operating systems, and ProPay is working on a version for Microsoft Corp.’s Windows 7 mobile-phone software.