Cover Story: Annual Guide to Alternative Payments

Mobile dominates this year’s Guide, as you’d expect, but so does the urge toward faster payments. Neither trend is going away any time soon.

The obvious theme running through alternative payments nowadays is the predominance of mobile. Processors, solutions vendors, and startups alike are scrambling to make it possible to run transactions on a wide array of devices, from feature phones to smart phones to tablets.

But another theme this year is the emergence of the so-called real-time payment. Entry after entry in our 2013 Field Guide is offering—or planning to offer—a payment service that speeds up settlement time from next day to same day to instant. This has involved considerable investment in moving away from the automated clearing house, for years the default settlement network underlying alternative-payments systems.

Weary of waiting for the ACH to speed things up, companies like Dwolla have built their own settlement infrastructure, while others have cut deals with electronic funds transfer networks, which have been moving money in near-real-time mode for decades.

The real-time trend isn’t separable from the mobile one. Mobile users have been trained to expect instant results in other spheres of their digital life (think of Amazon and its next-day delivery capability), and as they increasingly use their mobile devices to make payments, we can expect more startups and new services to emerge to serve that demand.

This is our fifth annual Field Guide, and, as was true with our previous Guides, it demonstrates just how volatile alternative payments is as a market. Among our 38 entries this year (up from 36 in 2012) are eight that are on the list for the first time, while half a dozen have dropped off. While one service on the 2012 list, American Express Co.’s Serve, is very much active, we determined that as a unit of AmEx it does not qualify as an alternative-payments provider. Other entries are still on the list, but under new names. Secure Vault Payments, for example, is now known as PayWithMyBank, while Pay With Square has changed its name yet again, this time to Square Wallet.

Generally speaking, for our purposes here, an alternative-payment system is any network or consumer interface (for example, a mobile app) that displaces the Visa/MasterCard/AmEx/Discover network (seen as one traditional system for this purpose), enables payments in a way that stands apart from that network (even if it ultimately uses it), and/or stands between that network and the consumer in an important way.

Our emphasis in this Guide is on consumer-facing payment systems, but of course many, if not most, of the systems profiled here market themselves to merchants to maximize acceptance of their products.

Information for the 38 listings comes from company Web sites and spokespersons as well as news reports over the past year. In most cases where pricing is listed, it refers to merchant costs.

Acculynk/PaySecure

Parent: Acculynk Inc.

Headquarters: Atlanta

Year Founded: 2008

Web site: www.acculynk.com

Field Notes: Acculynk and UnionPay International in March announced that Acculynk will be the provider of UnionPay’s e-commerce authentication (UPOP) service to U.S.-based merchants. UnionPay International is a subsidiary focusing on the international business of UnionPay, a China-based bankcard network with over 3.5 billion UnionPay cards issued worldwide. Acculynk’s technology allows consumers to make PIN-debit transactions on their PCs and mobile devices. The PaySecure technology relies on a so-called floating PIN pad that appears on the screen at checkout to let users enter their PIN. PaySecure is currently enabled on over 3,000 merchant Web sites and enables 150 million U.S. debit card holders to use PIN debit for online and mobile purchases. Acculynk has partnerships with 10 EFT networks to process PaySecure transactions and with six leading payment processors, and is certified with Pulse, First Data Corp., and MasterCard Inc.

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

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

Field Notes: Amazon.com in May is scheduled to break into the digital-currency market with Amazon Coins, a payment product for its tablet, the Kindle Fire. Users of the device will be able to redeem the new currency on the Amazon Appstore, which allows developers to sell games, apps, and in-app items. To give the currency a boost when it launches, Amazon says it will give away “tens of millions of dollars worth” of Coins to Appstore users, who will be able to buy more Coins using their Amazon accounts. Amazon Coins will be valued at a penny each and can be used to buy in-game currency on the app store. Usage will be restricted to the U.S.

Apriva Wallet

Parent: Apriva Inc.

Headquarters: Scottsdale, Ariz.

Year Founded: 2012

Web site: https://www.apriva.com

Pricing: Determined by acquirers

Field Notes: While digital wallets represent a new way to facilitate payments, their real value to merchants lies in their ability to deliver coupons, promotions, loyalty points, and other offers from merchants. Apriva Wallet looks to capitalize on that opportunity by enabling merchants to deliver relevant and timely offers that can be redeemed at the point of sale or shared with family and friends. Merchants can also cross-reference the customer’s identification codes in the wallet against their database at the point of sale to automatically determine whether the consumer is enrolled in their loyalty program. If the consumer is enrolled, points can be uploaded to the wallet or redeemed. Merchants can create coupons and offers based on customer behavior or to boost sales of specific merchandise, such as seasonal inventory.

BillFloat

Parent: BillFloat Inc.

Headquarters: San Francisco

Year Founded: 2010

Web site: https://www.billfloat.com

Pricing: Fees are assessed to both billers and consumers

Field Notes: BillFloat offers consumers loans of up to $200 for bill payment and sends the payments directly to more than 2,500 billers. The loan amount is deducted from the consumer’s bank account 30 days after the bill is paid. Service fees and interest charges vary by state. In Illinois, for example, the interest rate is 9% with a $20.95 processing fee. Illinois consumers who are late repaying BillFloat are charged 5% of the balance due. Consumers sign up by entering their billing name and bank account number. To verify their bank account and ability to repay loans, users can provide their online-banking user name and password or provide information about their employment, residency, and income.

Bill Me Later

Parent: eBay Inc.

Headquarters: San Jose, Calif.

Year Founded: 2000

Web site: https://www.billmelater.com/

Field Notes: While its corporate cousin PayPal posted stellar results in 2012, eBay’s transactional-credit service saw chargeoffs rise steadily throughout the year, reaching 5.3% in the fourth quarter, up from 4.4% a year earlier. But eBay said results were in line with company expectations and that since Bill Me Later, which is integrated into PayPal’s digital wallet, generates higher conversion rates for PayPal’s online clients, eBay can tolerate higher risk with the service. Bill Me Later has concentrated solely on serving consumers, but PayPal now plans to test offering U.S. online retailers merchant cash advances through Bill Me Later.

BilltoMobile   

Parent: Danal Co. Ltd.

Headquarters: San Jose, Calif.

Year Founded: 2010

Web site: http://www.billtomobile.com

Pricing: About 15% of the transaction

Field Notes: BilltoMobile, majority owned by South Korea-based Danal, operates in the carrier-billing space through relationships with major U.S. mobile-telecommunications providers. Its newest partner is U.S. Cellular; others include Verizon Wireless and Sprint. BilltoMobile merchants include online-game providers whose customers may not have or don’t want to use credit cards to pay for their games. A recent addition to the fold is Korea-based NCSoft, developer of the Aion and Lineage II games and which is expanding in North America.

Bitcoin

Parent: Bitcoin Project

Headquarters: none

Year Founded: 2009

Web site: http://bicoin.org

Pricing: Free to consumers; merchant cost varies

Field Notes: Digital currency Bitcoin earlier this year made some progress in its campaign to be viewed as a legitimate alternative to traditional payment methods. A major Bitcoin processor—Atlanta-based BitPay—processed more than $5.2 million in Bitcoin transactions for its e-commerce merchants during March. Bitcoin affiliates, however, continued to be targeted by hackers, with the latest breach occurring in April. Prices, meanwhile swung wildly, passing $260 before crashing. Bitcoin is an electronic currency developed and maintained by a decentralized network of cryptologists and application developers. It offers anonymity, international utility, and inflation protection, and has no connection to the existing payment systems. Users can download software from a number of so-called exchanges that provide Bitcoins at prevailing exchange rates. Specialist processors serve merchants.

Boku

Parent: Boku Inc.

Headquarters: San Francisco

Year Founded: 2009

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

Pricing: Reportedly under 10% per transaction.

Field Notes: Boku’s latest news is its integration with Bigpoint, a Luxemburg-based online-games platform with more than 300 million users internationally. In March, Boku partnered with U.S. Cellular to maximize the adoption of direct-to-bill mobile operator billing as a payment option. The partnership gives U.S. Cellular subscribers in 26 states new mobile-payment options. With Boku, customers enter their phone number at checkout, and respond via text message to confirm the payment. The charges appear on their wireless bills. Earlier in the year, Boku announced a platform that lets mobile carriers offer consumers the ability to pay physical merchants and receive and redeem offers and rewards from those merchants. The platform, Boku Accounts, is initially focused on Europe but is expected to expand to the U.S. With Boku Accounts, carriers would offer their subscribers a wallet they could use at the point of sale of any merchant that accepts MasterCard.

Buck

Parent: Billing Revolution Inc.

Headquarters: Seattle

Year Founded: 2007

Web site: https://www.gobuck.com

Pricing: 35 cents per transaction to consumers

Field Notes: Buck has rolled out several new applications to differentiate its mobile-wallet and mobile-payments solution. In January, Buck launched its Coffee Like a Rock Star app, which allows users to locate local coffee shops that accept Buck and order a cup of coffee and have it waiting for them when they arrive. Consumers can then pay using their Buck wallet. Buck, formerly known as Billing Revolution, charges consumers 35 cents per transaction, a portion of which is paid to the coffee shop. The company is also the payments provider behind the Dallas Cowboys’ in-stadium shopping program, in which 2D barcodes are used to promote products. Consumers can initiate a purchase by scanning the barcode with their mobile phone and are then taken to checkout pages operated by Buck.

Cardfree

Parent: Cardfree

Headquarters: San Francisco

Year Founded: 2012

Web site: https://www.Cardfree.com

2012 Transactions: Launched in December

Pricing: Not available

Field Notes: With more than 250 companies active in the mobile-payments space, standing out is not easy, but startup Cardfree is betting that its all-star management team will provide the innovation and marketing muscle needed to break away from the pack. The company is headed by former CorFire chief marketing officer Jon Squire, who previously led the mobile efforts of Dunkin’ Donuts and served as senior vice president of payments for mobile-banking solutions provider mFoundry, which spearheaded development of the popular Starbucks mobile-payments app. Cardfree’s chairman is Jeffrey Katz, who founded processor Mercury Payments Systems. Cardfree features a geo-location app to identify the consumer’s proximity to the merchant for marketing purposes. The company, which is targeting casual and fast-food restaurants, uses one-time authentication codes to protect transactions and customer data.

Chirpify

Parent: Chirpify

Headquarters: Portland, Ore.

Year Founded: 2011

Web site: https://www.chirpify.com

Pricing: A 5% transaction fee when the merchant is paid; a pre-negotiated contracted fee

Field Notes: Bringing one-click payments to social media, Chirpify enables consumers to purchase items through social media by typing the word “buy” into the reply box on Twitter and photo-sharing Web site Instagram or in the comments section on Facebook. Funds are deposited directly into the merchant’s PayPal account. Consumers can also make person-to-person payments by tweeting the word “Pay” and the amount of the transaction to the recipient’s Twitter account. Conversion rates for Chirpify merchants are 4% on average, double the typical e-commerce performqnce. Consumer-engagement rates for merchants are 5% to 6%, compared to 2% to 3% on promotional tweets. Chirpify is attracting 200-300 new members per day. Merchants accepting Chirpify include Adidas, Keith Richards, and Tim McGraw.

Cimbal

Parent: Cimbal Inc.

Headquarters: San Francisco

Year Founded: 2010

Web site: https://www.cimbal.com

2012 Transactions: Launched in August

Pricing: Not available

Field Notes: A mobile-promotion and -payment network designed to deliver targeted deals to consumers, Cimbal allows users to make purchases at the point of sale or online, or make person-to-person payments, by capturing an image of a 2D barcode through their Cimbal app. Consumers must enter their PIN for each transaction to validate their identity. Because Cimbal is software-based, merchants can easily integrate Cimbal codes into their POS system. Purchases can be funded using debit, credit, or prepaid cards or a bank account. Users do not need to pre-fund their account. Once launched, Cimbal shows deals available through local merchants. Analytics that track user behavior are available to help merchants create personalized offers.

clearXchange

Headquarters: Charlotte, N.C.

Parents: Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co.

Year founded: 2011

Web Site: https://www.clearxchange.com/

Pricing: At discretion of member banks

Field Notes: It’s the most ambitious U.S. person-to-person payments network yet formed, involving as it does three of the country’s largest banks accounting for roughly half of all U.S. online accounts. But it’s also slow to get off the ground. Though clearXchange was announced two years ago, Wells didn’t launch until a year later, and BofA only in July. No announcement so far from Chase. Still, the potential here is enormous, and all the more so if the three money-center founders can induce other banks to join the network. One big advantage enjoyed by cleearXchange is that surveys show consumers place more trust in bank-offered P2P services than they do in non-bank ones. But clearXchange has its work cut out for it. Non-banks like PayPal and Fiserv (see Popmoney) continue to grow in the P2P market, an enticing business that could generate an estimated 15 billion transactions annually, most of them converted from paper checks and cash.

Dwolla

Headquarters: Des Moines, Iowa

Parent: Dwolla Inc.

Year founded: 2008

Web Site: https://www.dwolla.com

Pricing: Free for receiving funds under $10, 25¢ above $10; Dwolla app developers can add a facilitator fee of 1¢ to up to half the transaction amount

Field Notes: A star of Iowa’s small but growing “Silicon Prairie,” Dwolla has been a leader in pushing for real-time non-card online and mobile payments. Dwolla uses the automated clearing house network to fund consumer-to-consumer and consumer-to-business payments funded by the payor’s bank account, but has developed a system called FiSync that relies on Web services to move money faster than the ACH. Dwolla in January announced a government-payments initiative. Consumers also can now use Dwolla to buy gift cards for retailers such as Barnes & Noble, Land’s End, Brookstone, The Limited, and Adidas thanks to Sionic Mobile Corp.’s ION Rewards program. Sionic plans to expand the program to 50 national brands by year’s end.

EasyPay

Parent: Apple Inc.

Headquarters: Cupertino, Calif.

Year founded: 2011

Web Site: https://itunes.apple.com/us/app/apple-store/id375380948

Field Notes: A relative of Apple’s in-store mobile-payment system, EasyPay is an app that iPhone or iPod touch users can download in Apple’s iTunes Store and use to pay for items at Apple’s physical stores without the aid of a clerk. Purchases have a number of security protections and are limited to less-expensive items. The customer scans the item he wants to buy and the app charges the purchase to the card linked to his iTunes account. Apple, which also offers the Passbook app for storing loyalty applications and digital content such as boarding passes, now has an estimated 400 million iTunes accounts, a potentially huge asset to deploy should it ever confirm speculation that it has greater payments ambitions than the modest EasyPay.

eLayaway

Parent: eLayaway Inc.

Headquarters: Tallahassee, Fla.

Year Founded: 2006

Web site: www.elayaway.com

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 is trying to move beyond its original online-layaway application. The company’s wholly owned subsidiary, named DivvyTech Systems Inc., supports a broader market with payment solutions. DivvyTech manages the company’s proprietary payment technology to support the automation and management of scheduled installment payments for retailers, health-care providers, financial institutions, leasing companies, collections agencies, payment processors, and the travel industry. DivvyTech’s Post-Denial Conversion product enables lenders and retailers to convert a declined credit application into a sale by offering consumers a layaway-credit hybrid plan. Retailers can choose to offer a full or partial layaway plan for customers declined credit.

Google Wallet

Parent: Google Inc.

Headquarters: Mountain View, Calif.

Year Founded: 2011

Web site: https://www.google.com/wallet/

Pricing: For digital goods, the lesser of 5% or 1.9% + a fixed fee

Field Notes: Eager to boost the appeal of its struggling mobile wallet to consumers and banks, Google Inc. last year overhauled the product. First, the search-engine giant opened Google Wallet to any credit or debit card branded by American Express Co., Discover Financial Services, MasterCard Inc., or Visa Inc. Before, payments could only be made using a Citibank MasterCard or a Google prepaid card, which were stored in a secure chip in the end user’s phone. Next, Google introduced a cloud-based app, thereby creating a hybrid wallet. Account data for cards linked to Google Wallet, which can be used at more than 200,000 merchant locations, are now stored on a secure server. For in-store purchases, a MasterCard-branded virtual card embedded in the secure element matches a user’s ID with their designated card in the Google cloud, which communicates accountholder data to the point of sale, then sends the transaction to the card issuer. Transactions with online merchants flow directly from the cloud-based cards. Google last October teased a trade-show audience by heralding a new version of the product (Google Wallet 2.0), but so far no further word on that out of Mountain View.

Intuit/AisleBuyer

Parent: Intuit Inc.

Headquarters: Mountain View, Calif.

Year Founded: 2009

Web site: http://www.aislebuyer.com/

Pricing: Not available

Field Notes: Intuit in January acquired the assets of Palo Alto, Calif.-based Payvment Inc., a 3-year-old vendor of shopping-cart and payment tools for merchants operating on social networks. The acquisition didn’t include Payvment’s base of some 200,000 sellers, which use the startup’s technology to manage orders and payments, chiefly on Facebook storefronts. Intuit also owns Aislebuyer, which can be used to scan merchandise in a store, receive promotional offers, and pay for the item while standing in the aisle using card credentials stored in a digital wallet. Users who can’t find what they’re looking for in the store can use the same wallet to order from the merchant’s Web site and arrange for home delivery.

Isis

Parents: AT&T Mobility, T-Mobile USA, Verizon Wireless

Headquarters: Dallas

Year Founded: 2010

Web Site: https://www.paywithisis.com

Pricing: No cost beyond normal card-acceptance expenses; issuers pay a fee to be in the wallet

Field Notes: After months of delays, the much-anticipated Isis mobile-payments and rewards service from three big mobile carriers finally went live in Austin, Texas, and Salt Lake City last October. Isis at first had to overcome early impressions that merchants capable of accepting mobile-phone-based payments were few and far between. A company executive early this year claimed Isis, whose system is based on near-field-communication (NFC) technology, had about 10,000 acceptance locations; about 75% of them are vending machines. Other acceptors include an assortment of national and local merchants, along with the Utah Transit Authority, the Salt Lake area’s bus and light-rail system. With help from some independent sales organizations, Isis offered free contactless terminals to boost acceptance, and it subsidized UTA mobile-phone payments to boost usage. A big Isis priority in 2013 is exploiting the possibilities for NFC-based loyalty and rewards programs.

Lemon

Parent: Lemon Inc.

Headquarters: Palo Alto, Calif.

Year Founded: 2011

Web site: http:/www.lemon.com

2012 Transactions: Recently launched

Pricing: Free to consumers for up to three cards

Field Notes: The Lemon mobile wallet allows consumers to store digitized versions of their credit, debit, and loyalty cards, as well as coupons and receipts,  on their smart phone. Consumers load their cards by snapping a picture of them. Once the card is loaded, Lemon communicates with the issuers to gather data that validates the card and pairs it with the user. The Lemon app encrypts all cardholder data, and a four-digit PIN is required to access the wallet. On average, users store about five cards. Lemon has teamed up with New York-based BillGuard to monitor activity on cards registered by consumers and identify potentially erroneous or fraudulent charges and alert cardholders about them. The service is free to consumers registering up to three cards.

LevelUp

Parent: SCVNGR Inc.

Headquarters: Cambridge, Mass.

Year Founded: 2011

Web site: https: www.theLevelUp.com

Pricing: 2% of sale

Field Notes: LevelUp added 500,000 new users over a four-month period ended in March, bringing its user base to 1 million. Since its launch in 2012, transaction volume has totaled $50 million. The company is now making its application programming interface (API) codes available to merchants to create their own mobile-payments application. Merchants pay $40,000 to $60,000 for each mobile-phone operating system for which they develop an app, such as Apple Inc.’s iOS or Google Inc.’s Android. A Facebook application enables users to receive offers and coupons via the social network. Merchant offers through Facebook are averaging 1,000 views and are downloaded by an average of five LevelUp users, up to two of whom redeem the offer within 14 to 30 days.

Mazooma   

Parent: Mazooma Inc.

Headquarters: Toronto

Year Founded: 2007

Web site: www.mazooma.com/merchant

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

Field Notes: U.S. players of Bigpoint can use Mazooma to purchase virtual credits for popular online games. Mazooma’s payment network, which lets consumers pay online merchants by debiting their checking accounts via online-banking systems, supports 15 of the largest U.S. banks and gives merchants access to more than 55 million American households that actively use online banking. The banks include Bank of America, BB&T, Chase, Citibank, HSBC Bank USA, Keybank, Regions, U.S. Bank, and Wells Fargo. The service is integrated into Bigpoint’s payment system, where users can choose Mazooma’s “Pay with Online Banking” option to complete their purchase. Mazooma’s payment platform is accessible to Bigpoint users through smart phones, tablets, and laptops.

Mocapay

Parent: Mocapay Inc.

Headquarters: Denver

Year Founded: 2006

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

Pricing: Not disclosed.

Field Notes: Mocapay, an early startup in the mobile-payments space, in December 2012 launched a token-solution mobilization platform that mobilizes any third-party service or point-of-sale payment solution. The solution closes the loop for customer transactions within merchants’ POS platforms, making it easier for customers using mobile devices to make purchases. Consumers can use their mobile device and select a payment method, loyalty card, or coupon and receive a six-digit single-use perishable Mocapay code that is delivered to their handset. The new application simplifies integration into the merchant’s POS or third-party service or payment provider without making any change to store or back-office operations. The token solution offers a broader range of transaction alternatives that are processed identically to plastic magnetic-stripe transactions.

Noca

Parent: Noca Inc.

Headquarters: Mountain View, Calif.

Year Founded: 2007

Web site: https://www.noca.com

2012 Transactions: More than 1 million per month

Pricing: 1.49% for checks; 2.99% for credit cards

Field Notes: A merchant aggregator, Noca has spent the past year focusing on expanding its check-acceptance capabilities to merchants. The company has signed more than 1,000 merchants. Plans are in the works for an updated release of its platform later this year that will include real-time authorization for ACH transactions, with processing within 24 hours. Noca, which stands for “no other charges apply,” waives chargeback fees when chargebacks are less than 1%. Consumers are automatically evaluated for fraud risk using an aggregated score of customer-behavior metrics, as opposed to authenticating the customer’s credit card number.

Openbucks   

Parent: Openbucks Corp.

Headquarters: Santa Clara, Calif.

Year Founded: 2011

Web site: http://www.openbucks.com

Field Notes: Openbucks operates a gift card payment network that enables consumers to use physical gift cards to buy digital content at what the company says are hundreds of online-gaming and other Web sites. Target customers are teenagers and other consumers who don’t have credit cards or have them but don’t want to use them online. Merchant partners include Subway, Burger King, CVS, Sports Authority, Citgo, Circle K, and Hess. Online merchants pay a flat percentage of the transaction to Openbucks.

Paycloud

Parent: SparkBase Inc.

Headquarters: Cleveland

Year Founded: 2009

Web site: http://sparkbase.com/paycloud/

Field Notes: Paycloud is a software-based loyalty system that enables small businesses to offer rewards and gift card programs to their customers who carry iPhones or Android smart phones. Consumers can enroll in a loyalty program on the Paycloud network through a merchant’s plastic loyalty card or the Paycloud mobile app. They redeem points or rewards by tapping their mobile device when it displays a Paycloud-generated barcode at the merchant’s Paycloud sensor or tablet computer. Recent developments include integration with Apple Inc.’s Passbook loyalty app.

Paydiant

Parent: Paydiant Inc.

Headquarters: Wellesley, Mass.

Year Founded: 2010

Web site: http://www.paydiant.com

Field Notes: Paydiant itself doesn’t provide a consumer-facing payments system, but instead offers cloud-based technology so that banks and payment processors can offer mobile payments to consumers. Paydiant software offers non-near-field-communication (NFC) systems such as QR codes, a form of barcode, but it also has an NFC version. Less than two years after its founding, the company picked up a huge client—processor Fidelity National Information Services Inc. (FIS), which was looking for mobile-payments technology that its bank and credit-union clients could offer as a white-label service to their customers. Later in 2012, another big processor, Vantiv Inc., enlisted Paydiant to provide the backbone of its new Vantiv Mobile Wallet.

Payfone

Parent: Payfone Inc.

Headquarters: New York City

Year Founded: 2008

Web site: www.payfone.com

Pricing: Not disclosed

Field Notes: Payfone is a remote processing service backed by American Express Co., Verizon Wireless, Rogers Communications, and several venture-capital firms. The company in September 2012 announced limited availability of 1 Touch Checkout, a new mobile-commerce checkout solution that connects shoppers’ mobile identities with their payment instruments. Payfone also announced that CardinalCommerce was a channel partner. 1 Touch Checkout creates a streamlined mobile-commerce checkout process by securely authenticating transactions through bank and carrier networks. Retailers can deploy the Payfone solution over their existing account structure since it requires no new code or payment mark.

PayPal

Parent: eBay Inc.

Headquarters: San Jose, Calif.

Year Founded: 1998

Web site: https://www.paypal.com/home

2012 Transactions: 2.4 billion (includes Bill Me Later and Zong)

Pricing (PayPal Payments standard, based on monthly online volume):

– Up to $3,000: 2.9% of sale plus 30¢

– $3,000.01-$10,000: 2.5% plus 30¢

– $10,000.01-$100,000: 2.2% plus 30¢

– $100,000 and up: N.A.

– Micropayments (under $10): 5% plus 5¢

– PayPal Here card reader swiped transaction: 2.7%

– PayPay Here key-entered/scanned: 3.5% plus 15¢

Field Notes: The king of alternative payments, PayPal saw total transaction volume rise nearly 30% in 2012. Mobile-payments volume exceeded PayPal’s own expectations by an eyebrow-raising $4 billion, rising from $4 billion in 2011 to nearly $14 billion last year when PayPal had predicted about $10 billion. Mobile payments now account for about 10% of PayPal’s volume, up from 3% in 2011, and PayPal projects mobile devices will bring in $20 billion in volume this year. But while brick-and-mortar retailers are trying to figure out how to go mobile, PayPal is going the other way by establishing beachheads at the physical point of sale. At the end of 2012, PayPal had forged agreements with 23 individual retailers such as The Home Depot Inc. for mobile POS acceptance at up to 18,000 locations. An agreement with Discover Financial Services holds the potential for PayPal to become a payment option at some 7 million U.S. merchant locations. PayPal recently struck a deal to be integrated into three of NCR Corp.’s mobile applications for hospitality merchants and convenience stores, and in April it bought Iron Pearl, a startup with roots in social media that specializes in customer acquisition and engagement.

PayWithMyBank    (formerly Secure Vault Payments)

Parent: eWise Group Inc.

Headquarters: Redwood City, Calif.

Year Founded: 2008

Web site: http://www.paywithmybank.com

Field Notes: Automated clearing house network governing body NACHA conceived of a system that would enable consumers to easily make online purchases and bill payments through the ACH by using their online-banking credentials and enlisted payment-services provider eWise to make the idea a reality. Eventually dubbed Secure Vault Payments (SVP) to emphasize its transaction security, the system went live in late 2010 and picked up a few dozen regional banks as providers. SVP landed a big fish in 2011 when U.S. Bank signed on. Many of the early participant billers were universities or public agencies. But little has been heard of SVP over the past year, apart from a reconstituted eWise rebranding it as PayWithMyBank. In the meantime, ACH online bill payments have been booming without the aid of Secure Vault Payments.

People Pay

Parent: Fidelity National Information Services Inc. (FIS)

Headquarters: Jacksonville, Fla.

Year Founded: 2013

Web site: http://www.fisglobal.com/products-epayment-persontopersonpayments

Pricing: Set by individual banks

Field Notes: The first service to run on FIS’s PayNet network, which the big processor unveiled last fall, People Pay enables real-time person-to-person payments, relying on PayNet’s link to the FIS-owned NYCE debit network and core-banking relationships managed by FIS. Users send money through their online-banking system to a recipient’s e-mail address or mobile-phone number. While the service is dubbed People Pay, FIS says banks may rebrand it as they please. Yet to come: a mobile version and a virtual gift card that can be funded via People Pay and sent via mobile devices.

Popmoney

Parent: Fiserv Inc.

Headquarters: Brookfield, Wis.

Year Founded: 2010

Web site: https://www.popmoney.com

Pricing: Financial institutions pay transaction charge, set retail pricing

Field Notes: Fiserv is a heavyweight in person-to-person online payments by virtue of the melding of its own ZashPay service with the Popmoney service that it acquired in September 2011 when it bought CashEdge Inc. for $465 million. The services are now combined under the Popmoney name. Fiserv says some 1,800 banks and credit unions offer or plan to offer Popmoney, which can be accessed through iPhone and Android apps or on the Web. Fiserv also is integrating the service with its Mobiliti mobile-banking platform. Last month, Popmoney transfers went real-time with Popmoney Instant Payments, a service that works through Popmoney banks that are also linked to Fiserv’s Accel or First Data Corp.’s Star debit networks.

Qwick Codes

Parent: MagTek Inc.

Headquarters: Seal Beach, Calif.

Year Founded: 2012

Web site: https://www.Qwickcodes.com

Pricing: App is free. Annual subscription based on flat fee

Field Notes: Addressing consumer concerns about mobile-payment security is key to Qwick Codes’ marketing strategy. The app generates a one-time use token that enables consumers to make in-store purchases by scanning a 2D Qwick Codes barcode on their phone at the point of sale or online by entering their eight-digit Qwick Code at checkout. Users can also make ATM withdrawals by selecting the Qwick Codes option, then entering their Qwick Code number and PIN, which eliminates the threat of ATM skimming.

Spindle

Parent: Spindle Inc.

Headquarters: Scottsdale, Ariz.

Year Founded: 2011

Web site: http://www.spindlehq.com

Field Notes: Spindle Inc. is developing mobile-payments and loyalty and couponing services that clients can offer as white-label services. The company has dropped its RhinoPay brand, under which it planned a person-to-person payments service, to focus on its mobile-commerce platform. This spring Spindle bought MeNetwork Inc., a Colorado-based provider of mobile advertising technology. Last month Spindle announced it was working with advertising services provider TruEffect Inc. so that TruEffect could use the MeNetwork platform to deliver timely, location-based offers from major retailers and restaurants to consumers through their mobile devices.

Square Wallet    (formerly Pay With Square)

Parent: Square Inc.

Headquarters: San Francisco

Year Founded: 2009

Web site: https://squareup.com/

Pricing: 2.75% of sale for swiped transactions, 3.5% plus 15¢ for manual transactions; flat $275 per month for yearly volume of up to $250,000

Field Notes: Formerly called Pay With Square and before that Card Case, Square Inc.’s consumer-facing mobile-payments service is now on its third name in less than three years—Square Wallet. A user deploying Square Wallet’s app for the iPhone or Android smart phone can walk into a Square-accepting merchant, say her name, and pay without even whipping out her phone. A new feature enables users to send electronic gift cards to friends and relatives. Meanwhile, Square is now in effect an independent sales organization for Starbucks Corp. That path-breaking development takes Square, which made a name for itself signing small, even part-time merchants to accept credit and debit cards through smart phones, to an entirely new level. Square also is integrating its mobile-payment system into Starbucks’s mobile service, an intriguing development that has encountered some glitches along the way, according to news reports.

Venmo

Parent: Braintree Payment Solutions LLC

Headquarters: New York City

Year Founded: 2009

Web site: https://www.venmo.com

Pricing: 3% for credit card transactions

Field Notes: After more than two years of testing, a long time for a startup company in the fast-moving world of mobile payments, Venmo finally debuted in 2012. The P2P payment service enables consumers to send money to friends and family via short-message-service (SMS) text messages, iPhone, Android. and Blackberry apps, or over the Internet. Venmo accounts are supported by major banks in the United States and can only be used in the U.S. While users are charged 3% of the transaction for sending money via a credit card, transactions made using a prefunded Venmo account, bank transfer, or debit card are free. All user-account data are encrypted and stored on secure servers. The startup was acquired in 2012 by Chicago-based processor Braintree.

WU Pay (formerly eBillme)

Parent: Western Union Co.

Headquarters: Englewood, Colo.

Year Founded: 2005

Web site: http://westernunion.com/wupay/

Pricing: 1% or 2% of the transaction online; $2.95 to $6.95 service fee at Western Union locations

Field Notes: Remittance giant Western Union in March 2012 launched the WU Payment Platform based on the e-Billme online-payment service, which the company acquired in October 2011. The platform allows shoppers in the U.S. to pay for online purchases from their existing bank accounts or in cash at Western Union agent locations. Customers using WesternUnion.com to make money transfers also can use WUpay. Western Union has 44,000 agent locations in the U.S. The WU Payment platform leverages Western Union’s core customer base—underbanked consumers who use Western Union to pay bills or to send money somewhere in the world. Customers can use WU Pay at any financial institution that offers online bill payment as an option.

ZipZap   

Parent: ZipZap Inc.

Headquarters: San Francisco

Year Founded: 2010

Web site: www.zipzapinc.com; www.cashpayment.com 

Pricing: Not disclosed.

Field Notes: ZipZap in 2012 launched CashCade, a payment application for e-commerce merchants. Through an API integration, e-commerce retailers can add the CashCade option to their shopping carts, giving consumers the option to pay cash. The consumers selects “Pay with Cash,” prints the auto-generated payment slip and takes it to any one of ZipZap’s 700,000 payment center locations worldwide where they complete the transaction by paying cash. CashCade gives e-merchants a way to convert what would otherwise be lost transactions when a consumer’s credit or debit cards are declined. The CashCade payment option automatically offers the consumer the ability to pay with cash as soon as a card-decline notification is presented.