Cover Story

Annual Field Guide to Alternative Payments

You’ll need a fair amount of memory on your hard drive to keep track of all the comings and goings in the bubbling world of alternative payments.

By now, our Field Guide to Alternative Payments needs no introduction. It’s one of our most popular features of the year, providing a snapshot of payment services from established players down to hopeful startups that enable consumers to pay for general purchases online, at the point of sale, or with a mobile device without pulling out a conventional credit or debit card or writing a check.

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. 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.

This fourth iteration of the Field Guide tracks a massive amount of change in the alternative-payments space, much of it driven by the prospect of mobile devices supplanting payment cards. After adding and subtracting entries, we ended up with 36 listings this year, up by one from our 2011 excursion through this territory. Some providers noted in earlier Field Guides are gone, such as Bling Nation and Tempo Payments, or have been absorbed so thoroughly in other products as to lose any independent existence, such as Google Checkout.

Others changed their names over the course of the past year. And yet others were acquired: CashEdge by Fiserv, ChargeSmart by VeriFone, eBillme by Western Union, and Zong by eBay, to name a few. And big companies looking for cutting-edge technology or a groundbreaking marketing system are investing in payments startups: Visa’s got money in Square, American Express in Payfone, and Google in SCVNGR, provider of the LevelUp loyalty and payment system. It could be that most payments startups have little more than a hope and a prayer, but they all offer some instructive experience for the broader industry.

Information for the 36 listings came from company Web sites and spokespersons as well as news reports over the past year. Unless noted otherwise, the pricing line item refers to merchant costs.

Acculynk/PaySecure

Parent: Acculynk Inc.

Headquarters: Atlanta

Year Founded: 2008

Web site: www.acculynk.com

2011 Transactions: Not disclosed

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

FIELD NOTES: Acculynk and major e-commerce merchants in November 2011 announced the formation of the International Internet PIN Acceptance Consortium to make Acculynk’s PaySecure the standard for processing Internet PIN-debit transactions internationally. Membership in the Consortium is currently open to Internet retailers and airlines that have partnered with Acculynk for PaySecure, but the Consortium is considering extending membership to all leading e-commerce merchants. Acculynk’s technology allows consumers to make PIN-debit transactions on their PCs. 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. Acculynk has partnerships with nine 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

2011 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: Amazon.com Inc. quietly killed its PayPhrase online-authentication service in February, about two-and-a-half years after introducing the system. The PayPhrase credentials system allowed online shoppers to check out using only a word or phrase of their choosing and a PIN they had registered with the Amazon Payments service. Amazon introduced a successor service called “Purchase Delegation” that allows up to 300 authorized buyers to use the same account. Amazon, whose Checkout by Amazon and Amazon Simple Pay services are used by many unaffiliated e-commerce merchants, promoted PayPhrase as a way to reduce so-called shopping cart abandonment.

Apriva Wallet

Parent: Apriva Inc.

Headquarters: Scottsdale, Ariz. / Year Founded: 2012

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

2011 Transactions: Launched in 2012

Pricing: Determined by acquirers

FIELD NOTES: Here’s an unusual entry in the ongoing wallet wars—a mobile wallet intended to keep independent sales organizations and other acquirers on the battlefield. The product is designed to appeal to consumers by managing payment cards and receipts and serving up offers, but it is being sold to merchants by acquirers as a direct response to offerings from Silicon Valley. With the Apriva product, participating merchants gather mobile numbers from interested customers during a transaction. Customers then receive a text with a link to download the Apriva app from the app store for their phone system. The app arrives loaded with the card the customer just used, a loyalty card for the merchant, and a digitally signed receipt for the transaction. Merchants that choose to can offer coupons that can be digitally signed and serialized to prevent duplication.

BillFloat

Parent: BillFloat Inc.

Headquarters: San Francisco

Year Founded: 2010

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

2011 Transactions: Not available

Pricing: Fees are assessed to both billers and consumers

FIELD NOTES: What Bill Me Later does for so-called transactional credit for online purchases, BillFloat does for paying bills. Consumers who are temporarily short of funds to pay bills between $40 and $200 can get them paid by BillFloat, and have 30 days to pay the company back. (The Bill Me Later comparison is especially apt given that one of BillFloat’s investors is PayPal, a Bill Me Later sister company.) Consumers don’t have to pay interest but do pay the company a flat fee per float. Billers pay a percentage on each transaction but avoid collections hassles. The company focuses on signing up major billers that it can pay electronically through established networks like MasterCard RPPS.

Bill Me Later

Parent: eBay Inc.

Headquarters: San Jose, Calif.

Year Founded: 2000

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

2011 Transactions: Volume: $2.29 billion

Pricing: Not disclosed

FIELD NOTES: The numbers headed in the right direction in 2011 for the online lending unit of eBay’s PayPal payments subsidiary. Transaction volume jumped 68% from $1.36 billion in 2010. (Last year’s Field Guide incorrectly said $1.27 billion for 2010.) Credit quality continued to improve, with net chargeoffs declining to 4.46% of receivables from 7.71% in 2010. Most customers sign up on merchant Web sites; credit decisions are made on a “transactional” basis rather than using a revolving line. WebBank actually issues the credit, with Bill Me Later buying the receivables. The customer interest rate is 19.99%. A spokesperson would not disclose current merchant pricing, saying it varies based on factors that include size. The 2011 Field Guide listed standard pricing at 2% plus 15 cents.

BilltoMobile

Parent: Danal Co. Ltd.

Headquarters: San Jose, Calif.

Year Founded: 2010

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

2011 Transactions: Not available

Pricing: About 15% of the transaction

FIELD NOTES: BilltoMobile, a specialist in direct billing of a merchant charge to a cell-phone account, has relationships with the major U.S. wireless carriers, giving it access to more than 200 million consumers. In fact, BilltoMobile is now the payment gateway provider for Verizon and Sprint. Majority owned by Korea-based Danal, the company in March announced a marketing agreement with Discover Financial Services that allows Discover to offer BilltoMobile service to e-commerce merchants. In January, BilltoMobile introduced a “one-click” service that streamlines the process of charging a purchase to the user’s network-identified phone number. The first merchant to use it is mobile-game developer MocoSpace.

Bitcoin

Parent: Bitcoin Project

Headquarters: None

Year Founded: 2009

Web site: http://bitcoin.org/

2011 Transactions: Not available

Pricing: Free to consumers, merchant costs vary

FIELD NOTES: It’s the ultimate alternative-payment mechanism, an electronic currency developed and maintained by a decentralized network of cryptologists and application developers that offers anonymity, international utility and inflation protection, completely unfeterred from existing payment systems. Users need only download the software; a number of so-called exchanges provide Bitcoins at prevailing exchange rates. Specialist processors serve merchants. Bitcoin must be on to something because lawmakers and regulators already have expressed fear about its potential for use by drug dealers, terrorists and others whose motives aren’t pure.

Boku (Paymo)

Parent: Boku Inc.

Headquarters: San Francisco

Year Founded: 2009

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

2011 Transactions: Not disclosed.

Pricing: Reportedly under 10% per transaction

FIELD NOTES: Boku Inc. in March 2012 announced a platform that will let mobile carriers offer consumers the ability to pay physical merchants and receive and redeem offers and rewards from those merchants. The platform, called Boku Accounts, focuses on Europe but is designed to expand into other regions, including North America, the company says. With Boku Accounts, carriers would offer their subscribers a wallet they could use at the point of sale of any merchant that accepts MasterCard. The product comes with a MasterCard-branded prepaid card that can also exist as a contactless sticker affixed to the user’s handset. Users can load and reload the account with another card, with a bank-account transfer, or with a cash top-up. The sticker will work with any merchant that has installed contactless readers.

Buck

Parent: Billing Revolution Inc.

Headquarters: Seattle

Year Founded: 2007

Web site: www.gobuck.com

2011 Transactions: Not available

Pricing: Not available

FIELD NOTES: This startup, formerly known as Billing Revolution, concluded from the beginning that steps like user enrollment, setting up accounts, and establishing user names and passwords would discourage consumers from even trying mobile payments. That ruled out any reliance on the automated clearing house, the back-end payment mechanism many alternative-payments players use. Instead, Buck lets users pay merchants with a single click that triggers a charge against a credit card on file.

ChargeSmart

Parent: VeriFone Systems Inc.

Headquarters: San Francisco

Year Founded: 2008

Web site: www.chargesmart.com

2011 Transactions: Not available

Pricing: Not available

FIELD NOTES: ChargeSmart was started by entrepreneurs who were frustrated that they couldn’t make their mortgage and car-loan payments online with a credit card. Today, it enables Visa, MasterCard, and Discover payments for those obligations as well as utility bills and education loans. Point-of-sale terminal powerhouse VeriFone acquired the company in January.

Dwolla

Parent: Dwolla Inc.

Headquarters: Des Moines, Iowa

Year Founded: 2008

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

2011 Transactions: Not disclosed

Pricing: 25 cents per transaction, but free for payments under $10; for PC payments, sender chooses who pays fee; for mobile payments, recipient pays

FIELD NOTES: A conflation of “dollars on the Web,” Dwolla is putting Iowa on the map as a potential hotbed for payments innovation. Its latest coup was an investment last month from actor and Iowa native Ashton Kutcher. With Dwolla, users can pay each other or pay merchants via either a PC or a mobile device. Currently, Dwolla uses the ACH to transfer funds from users’ bank accounts to their Dwolla accounts, but since ACH funding takes several days the company is working on a system that will rely on Web services to move money in near real time. Banks will integrate the system using Dwolla’s application programming interface. Once their accounts are funded, users can pay merchants or other individuals. Transfers between Dwolla accounts occur in real time. Using Dwolla’s software, users can integrate payments with social networks, letting friends in on where they’re shopping, what they’ve bought, and what they’ve paid. The startup has stopped reporting numbers, but as of December it had enrolled 70,000 users and recruited more than 3,000 merchants, with new merchants signing up at the rate of more than 100 a day. While Dwolla works on faster funds transfers, it offers an option called “Instant,” which allows users to borrow up to $500 that they can use right away rather than waiting two or three days for funds to clear into their Dwolla account.

EasyPay

Parent: Apple Inc.

Headquarters: Cupertino, Calif.

Year Founded: 2011

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

2011 Transactions: Not available

Pricing: Not available

Field Notes: In November, Apple brought iTunes to the brick-and-mortar world with the introduction of EasyPay. This self-service feature, technically part of the upgraded Apple Store app, allows iPhone users to walk into an Apple store, take an item off the rack, scan its bar code, enter an Apple ID and three-digit card-verification value to make payment, and walk out—all without dealing with a sales clerk. The app then stores an electronic receipt in an EasyPay folder. There are some restrictions. The service works only with the iPhone 4 and 4S models. And, to help control losses to theft, only low-end merchandise—think iPhone cases, AC adapters, car chargers—is eligible for EasyPay. Also, again to put a lid on theft, items must be rung up one at a time. And users must either have the credit card with them that is linked to their iTunes account, or must have memorized its CVV. Some observers have said EasyPay is a great feature for users in a crowded store where it’s hard to get a clerk’s attention, but if things are slow, or if a customer has picked up a lot of items, users might be better off button-holing a clerk. And, while Apple Store folks say they have security systems in place, without for obvious reasons going into details, there might not be much to stop someone from pretending to pay and then walking out with ill-gotten goods. Still, iTunes boasts some 225 million users, and Apple has built 245 stores in the U.S. Not a bad base to start from.

eLayaway

Parent: eLayaway Inc.

Headquarters: Tallahassee, Fla.

Year Founded: 2006

Web site: www.elayaway.com

2011 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 the past year has taken several steps to move beyond its original online layaway application. In January, the company formed a wholly owned subsidiary called DivvyTech Systems Inc. to support a broader market with payment solutions. DivvyTech will manage the company’s proprietary payment technology to support the automation and management of scheduled installment payments for retailers, healthcare providers, financial institutions, leasing companies, collection agencies, payment processors, and the travel industry. DivvyTech will be a B2B payment-technology company, while the brands it manages will serve consumer, small business, middle market, and enterprise-level companies. In February, eLayaway acquired Centralized Strategic Placements Inc., which provides technology supporting member-based shopping exchanges.

Facebook Credits

Parent: Facebook Inc.

Headquarters: Palo Alto, Calif.

Year Founded: 2004

Web site: http://www.facebook.com/credits/

2011 Transactions: Not available

Pricing: 30% of sale

FIELD NOTES: After guessing about its inside operations for years, observers and potential investors in leading social network Facebook Inc. got a close-up when Facebook issued a registration statement Feb. 1 ahead of a planned initial public offering. That filing revealed that Facebook, which issues the Facebook Credits virtual currency, generated $557 million in payments revenues in 2011, five times 2010’s payment revenues of $106 million. Network members use Facebook Credits mainly to buy tools, weapons and other digital items in social games, most of which, however, can be played for free. Data from leading online game developer Zynga Inc., whose fortunes are closely intertwined with Facebook, indicate that only about 2% of players buy virtual stuff. Thus, Zynga’s—Facebook’s—big task is “monetization,” a fancy word for converting players into payers. One obstacle: Facebook’s 30% cut on Facebook Credits transactions.

Google Wallet

Parent: Google Inc.

Headquarters: Mountain View, Calif.

Year Founded: 2011

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

2011 Transactions: Not available

Pricing: Not available

FIELD NOTES: Google’s entry in the digital-wallet wars incorporates MasterCard-branded credit card accounts from partner bank Citigroup Inc. as well as a so-called Google prepaid card that can be funded with any card. First Data Corp. is serving as trusted service manager, a role in which it provisions card-account details to the Google phones. The huge processor is also marketing the wallet to merchants. Sprint Nextel is the carrier network. Payment details in the wallet are PIN-protected, though Google sustained a setback earlier this year when a security firm demonstrated how to compromise the PIN. Any merchant that accepts contactless cards can accept payments from the Google wallet. Consumers who want to redeem offers stored in their wallet can show their phones to store clerks, who can scan the screens or enter the necessary data manually. With a system Google calls SingleTap, however, merchants can redeem offers with the same tap that effects payment. Google Wallet went commercial in September. Pricing to merchants has not been disclosed, though the service is free to consumers and issuers. Google Wallet also incorporates Google Checkout, which no longer exists as a separate service.

Intuit/AisleBuyer

Parent: Intuit Inc.

Headquarters: Boston

Year Founded: 2009

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

2011 Transactions: Not available

Pricing: Not available

FIELD NOTES: With AisleBuyer, a user can 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. The user then shows a receipt displayed on his phone screen as he heads out the door. 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. To ease data entry, AisleBuyer also lets users capture card information using their phones’ camera. Last spring, the startup had deployed its system to a four-unit toy-store chain in Boston called Magic Beans. While it’s not clear how many other stores have installed the system, AisleBuyer 11 months ago had signed agreements with unnamed retail companies accounting for 19,000 locations, with two chains accounting for the bulk of those stores. Intuit Inc. bought AisleBuyer last month to complement its GoPayment mobile-acceptance service for small merchants.

Isis

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

Headquarters: Dallas

Year Founded: 2010

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

2011 Transactions: Launching in 2012

Pricing: Not disclosed

FIELD NOTES: Isis is a joint venture put together by three of the nation’s biggest wireless carriers. It is expected to launch its service, which relies on a digital wallet and near-field communication (NFC) technology for connectivity with merchant terminals, this summer in Salt Lake City, Utah, and Austin, Texas. The product will come preloaded with cash to jumpstart transactions and will feature the ability to “follow” merchants to receive coupons and offers. A feature called “Clip to Isis” will let users scan QR codes to load offer details from print media, posters, and online displays. So far, JPMorgan Chase & Co,’s Chase Card unit, Barclaycard U.S., and Capital One Financial Corp. have agreed to issue cards for the wallet. The venture said earlier this year it planned to have at least 1,000 merchants signed up in each of the two test cities in time for an expected July launch.

LevelUp

Parent: SCVNGR Inc.

Headquarters: Cambridge, Mass.

Year Founded: 2011

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

2011 Transactions: Not available

Pricing: 2% of sale

FIELD NOTES: Founded by location-based mobile-game developer SCVNGR, LevelUp puts a mobile-payments and loyalty twist on merchants’ old-fashioned punch cards for rewarding customers for repeat business. Consumers download the LevelUp app to an iPhone or Android smart phone, or use the mobile Web, and register a credit or debit card for funding. For purchases, the app displays a 2-D barcode on the phone’s screen that the merchant scans. Customers get a credit, typically $5 to $20 at a restaurant, on the first visit and more credits for repeat purchases. LevelUp in early April had 1,229 merchants, mostly single-location restaurants, in nine metro areas, including Philadelphia, Boston, New York City and San Francisco, and reportedly is looking for national merchants. Acceptors pay 2% of the sale, according to the Mobile Ventures newsletter. SCVNGR’s investors include Google Inc.’s Google Ventures.

Mazooma

Parent: Mazooma Inc.

Headquarters: Toronto / Year Founded: 2007

Web site: www.mazooma.com/merchant

2011 Transactions: Not disclosed

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

FIELD NOTES: Mazooma in December partnered with Paymentwall, a global payment-platform provider, to enable companies using Paymentwall’s digital platform to offer Mazooma as an option. Mazooma’s service was integrated into Paymentwall’s 2-click-payment system. Mazooma allows consumers to pay online merchants by debiting their checking accounts through their online banking programs. Mazooma also moved further into the online gaming space earlier this year, adding Virgin Gaming and Bigpoint to its merchant base. Virgin’s players can use Mazooma to use funds directly from their bank accounts for cash-based tournament and head-to-head game play. U.S. players of Bigpoint can use Mazooma to purchase virtual credits for popular online games. Bigpoint has 261 million registered users worldwide.

MobilePay USA

Parent: Universal Commerce Inc.

Headquarters: Aliso Viejo, Calif. / Year Founded: 2010

Web site: www.mobilepayusa.com

2011 Transactions: Not disclosed

Pricing: Introductory marketing fee of 1% or a 10-20 cents per transaction minimum. MobilePay does not charge a payment processing fee

FIELD NOTES: Two-year-old MobilePayUSA is still in development but planning to launch a beta. Universal Commerce, the company that offers MobilePayUSA, is working with independent sales organizations to sell to merchants. Mobile users can find a store accepting MobilePayUSA using the geo-location feature on their phone. Once there, they can pay by launching the application and touching a “pay store” button. They then enter a four-digit PIN and the amount they need to pay. The payment is routed behind the scenes and an authorization appears simultaneously on their phone and the merchant’s POS terminal. Transactions are charged against credit or debit accounts that are not stored on the phone. There are no barcodes and no NFC, which limits the need for optical scanners, contactless readers, or similar devices.

Mocapay

Parent: Mocapay Inc.

Headquarters: Denver, Colo.

Year Founded: 2006

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

2011 Transactions: Not disclosed

Pricing: Not disclosed

FIELD NOTES: Mocapay, an early startup in the mobile-payments space, this year is finally poised to go national with new partners, a different pricing model and a broadened set of technological options that its president says makes payments by smart phone easier for merchants and consumers. Late last year, with a new emphasis on marketing in combination with payments, it recruited two value-added resellers and two advertising agencies to offer its service to merchants, according to Doug Dwyre, a former executive at First Data Corp. who joined Mocapay as president in 2011. Mocapay also has revamped its pricing. Previously, merchants paid a flat 19 cents per transaction, plus a fee of $10 per month per terminal. Now they pay a monthly subscription fee, which Dwyre won’t disclose publicly.

Noca

Parent: Noca Inc.

Headquarters: Mountain View, Calif.

Year Founded: 2007

Web site: www.noca.com

2011 Transactions: Not disclosed

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

FIELD NOTES: Noca markets itself as a low-cost alternative to credit, debit, and checks. It allows consumers to complete online payments without having to type in their 16-digit credit card numbers or checking account and routing information for every transaction. Instead, they select a Noca PIN the first time they transact. On subsequent transactions, the system recalls the data entered for the first transaction and fills it in automatically. There has been little news from the company since February 2009, when it launched an online payment product that relies on the automated clearing house network. The company was founded by former Visa executives.

Obopay

Parent: Obopay Inc.

Headquarters: Redwood City, Calif.

Year Founded: 2005

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

2011 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: The Pulse EFT Network earlier this year began offering Obopay’s mobile money solutions to Pulse network participants for money transfers, P2P payments, A2A transfers, personal payment acceptance, and other transactions. Ohio Valley Bank became the first Pulse participant to offer the Obopay solution. Obopay in 2010 launched Mobile Money for Banks, a white-label service that enables consumers to accept payment cards. 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.

OpenBucks

Parent: Openbucks Corp.

Headquarters: Redwood City, Calif.

Year Founded: 2011

Web site: www.openbucks.com

2011 Transactions: Launched in fall 2011

Pricing: Not disclosed

FIELD NOTES: With OpenBucks, consumers can use gift cards they get from physical-world merchants to buy digital goods online, starting with games. To use Openbucks, a consumer at checkout selects the gift card option. In a two-step process, the cardholder first redeems credit on his card with the issuing merchant in a shopping cart created by Openbucks, which then immediately transfers that credit to the game publisher. The cardholder’s receipt, displayed onscreen, indicates both phases of the transaction. The startup says issuers benefit from increased reloads at their stores (about 28% of all gift cards are reloadable) and online merchants gain access to a teen market that typically doesn’t have credit cards. For each transaction, online merchants pay OpenBucks a fee, which the startup shares with issuers.

Paycloud

Parent: SparkBase Inc.

Headquarters: Cleveland

Year Founded: 2009

Web site: http://sparkbase.com/

2011 Transactions: Not available

Pricing: Not available

FIELD NOTES: Startup SparkBase got into rollout mode last year with its Paycloud mobile-wallet application that handles payments and distributes loyalty rewards using ultrasonic technology. Consumers download the Paycloud app to their mobile phone and enroll, while merchants use a $50 sensor that plugs into a point-of-sale terminal to complete transactions.

Payfone

Parent: Payfone Inc.

Headquarters: New York City

Year Founded: 2008

Web site: www.payfone.com

2011 Transactions: Not disclosed

Pricing: Not disclosed

FIELD NOTES: Payfone, a remote processing service backed by American Express Co., Verizon Wireless, Rogers Communications, and several venture-capital firms, continues to beef up its management team. Earlier this year, the company added payment and mobile executives to its ranks, including Prakash Hariramani, a former Visa Inc. executive; William Murray, a former MasterCard Inc. executive; Scott Shepherd, a Verizon Wireless executive; and Amy Masters, a former AmEx executive. Payfone’s 1 Touch Checkout leverages the mobile operator network to authorize and process payments. AmEx has integrated Payfone’s mobile-authorization and payment system into its Serve digital payments platform so Serve accountholders can make purchases using their mobile-phone numbers.

PayPal

Parent: eBay Inc.

Headquarters: San Jose, Calif.

Year Founded: 1998

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

2011 Transactions: 1.86 billion (includes Bill Me Later and Zong volume)

Pricing: (PayPal Payments standard, based on monthly online volume)Up to $3,000: 2.9% plus 30 cents$3,000.01-$10,000: 2.5% plus 30 cents$10,000 and up: 2.2% plus 30 centsCard reader/swiped: 2.7%Card reader/key-entered or scanned: 3.5% plus 15 cents

FIELD NOTES: About the only corner of payments PayPal doesn’t seem to be in is barter. Mobile payments? Hey, $4 billion in volume last year; more than anyone else. Very little, if any, of that came through the near-field communication (NFC) technology being pushed by competitors, but PayPal does have an NFC presence through a new widget for Android smart phones. Parent company eBay bought mobile-payments technology provider Zong, which has connections to 250 mobile-network operators around the world. The first months of 2012 saw PayPal announce its first-ever revamp of its digital wallet and commence its long-rumored point-of-sale initiative with Home Depot as the first merchant. The company also introduced PayPal Here with a carder to compete for small merchants using smart phones. Executive turnover is PayPal’s major challenge for the moment; president Scott Thompson left to become Yahoo’s chief executive and some other senior executives also departed.

Pay With Square

Parent: Square Inc.

Headquarters: San Francisco / Year Founded: 2009

Web site: https://squareup.com/

2011 Transactions: Not available

Pricing: 2.75% of sale for swiped transactions, 3.5% plus 15 cents for key-entered transactions.

FIELD NOTES: There would be no Mad Men if other companies were as successful as Square in securing free publicity. Square recently renamed and enhanced its consumer-facing Card Case service as “Pay With Square.” A smart-phone user with a registered credit card can find Square merchants and pay without even pulling his phone out by simply telling his name to the clerk at the checkout counter. The customer’s registered photo and name will appear on a Square-enabled iPad or smart phone. More than 1 million small businesses and occasional merchants generating $4 billion in annual charge volume use Square’s acceptance service that employs a now-famous cube-shaped card reader, which plugs into a smart phone or iPad. Some 11,000 locations of major retailers such as Apple, Best Buy, Target, Wal-Mart, Radio Shack, OfficeMax and The UPS Store also take Square, whose investors include Visa.

Popmoney

Parent: Fiserv Inc.

Headquarters: Brookfield, Wis. / Year Founded: 2010

Web site: https://www.popmoney.com/popnet/faces/popmoney/login/homepage.jsp

2011 Transactions: Not disclosed

Pricing: Banks pay transaction charge, set retail pricing.

FIELD NOTES: Two heavyweights in person-to-person payments joined forces last September when bank processor Fiserv Inc., provider of the ZashPay p2p service, bought CashEdge Inc. with its rival Popmoney service for $465 million. Next month, Fiserv plans to combine the two services under the Popmoney brand. The combined network, which also will be integrated into Fisher’s Check Free RXP payment suite, will connect 1,400 financial institutions and have access to 35 million consumers. Providers include Citibank, PNC Bank, Regions Bank, Fifth Third Bank, and BBVA Compass, in addition to more than 1,300 local and regional institutions. The combined service will include technology from both predecessors. Customers will send money directly from their bank accounts to another person using the other person’s bank-account number, e-mail address, or mobile-phone number. Previously, customers could send money using an e-mail address or mobile number.

ProPay Link (formerly Zumogo)

Parent: ProPay Inc.

Headquarters: Lehi, Utah

Year Founded: 2011

Web site: http://www.propay.com/products-services/accept-payments/link/

2011 Transactions: Not available

Pricing: Not available

FIELD NOTES: Consumers using this app from independent sales organization ProPay can send and receive messages to and from merchants and pay them using credentials stored by ProPay on its ProtectPay platform, not on the phone. Merchants can send messages regarding events likely to appeal to users (for example, an appearance by a favorite author or band). The app works on phones running either Apple Inc.’s iOS or Google Inc.’s Android operating system. For merchants, the product includes a Web-based console that allows them to push out notices about events or offers and to receive payments. Introduced early in 2011 as Zumogo, the product dropped that name in favor of ProPay Link later in the year.

Qwick Codes

Parent: MagTek Inc.

Headquarters: Seal Beach, Calif.

Year Founded: 2012

Web site: www.qwickcodes.com

2011 Transactions: Launched in January 2012

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

FIELD NOTES: The Qwick Codes wallet allows users to pay using one-time, eight-digit identifiers that are generated uniquely for each transaction and that can be entered on a PC or at an ATM or scanned at the point of sale from the phone’s screen. The identifiers are linked to payment cards users load into the wallet using a reader that attaches to mobile devices running Apple Inc.’s iOS operating system. To generate a code, users swipe any of the cards they have loaded into the wallet. Using the codes, users can set spending limits or authorize others to withdraw cash by sending them the one-time code. While the app is free, the service requires an annual subscription and a $50 “Qwick Codes Kit” that includes the reader. Currently, the codes can be used at any of the 55,000 ATMs driven by network operator Payment Alliance International, at a physical merchant using MagTek’s QwickPay mobile-payment service, or online at magtek.com and qwickey.com.

RhinoPay

Parent: Spindle Inc.

Headquarters: Scottsdale, Ariz.

Year Founded: 2011

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

2011 Transactions: None; service under development

Pricing: Not available

FIELD NOTES: RhinoPay is the product name of the pending person-to-person payments and mobile-commerce service from Spindle, a mobile-payments start-up headed by former Apriva Inc. and First Data Corp. executive Bill Clark. The firm will recruit both banks and non-banks to offer the device-agnostic RhinoPay, which can be white-labeled. On the merchant side, Spindle is a registered payment services provider for Bank of America Merchant Services and plans to pursue micro merchants with its payment services that will include business-to-business and business-to-consumer payments as well as mobile check deposit.

Secure Vault Payments

Parent: eWise USA

Headquarters: Denver

Year Founded: 2008

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

2011 Transactions: Not available

Pricing: As of spring 2011—1.35% of sale for merchant transactions, 50 cents for bill payments, 40 cents for government agencies, payable by acquirer; separate switch fee of up to 6 cents payable by both acquirer and authorizing bank; and 1 cent fee to NACHA payable by authorizing and acquiring bank. Acquirers set final pricing to merchants.

FIELD NOTES: Conceived by automated clearing house governing body NACHA as a way to enable online ACH payments, SVP went live in late 2010 and is slowly building mass on the bank and merchant side. An SVP bank’s customer accesses the service through an accepting merchant’s e-commerce site, which will link her to her bank’s site for payment. About 40 banks now offer SVP, the largest being U.S. Bancorp, while about 20 entities, including universities and some retailers and public agencies, accept it. An executive with the operator of the SVP switch, eWise USA, told Digital Transactions recently that the pipeline of banks expected to offer the service in the near future is “very healthy.”

Serve

Parent: American Express Co.

Headquarters: New York City

Year Founded: 2011

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

2011 Transactions: Not available

Pricing: For account loading: 2.9% of load amount plus 30 cents for credit card-funded loads, no fee if load is from checking account; ATMs: first monthly withdrawal free, $2.00 thereafter. P2P payments: free.

FIELD NOTES: Serve is American Express’s reloadable prepaid card service backed up by online functionality that AmEx acquired in 2010 when it bought Revolution Money. Users can pay with the prepaid card anywhere AmEx cards are accepted, and fund the card online with any major credit card or a checking account. Person-to-person payments were part of the original package, and AmEx in February introduced a Facebook application that allows Facebook members to request, send and receive payments in just a few clicks. Last year, AmEx invested in Payfone Inc. with intentions of integrating Payfone’s one-click payment platform for mobile devices into Serve.

WU Pay (formerly eBillme)

Parent: Western Union Co.

Headquarters: Englewood, Colo.

Year Founded: 2005 (as eBillme)

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

2011 Transactions: Not disclosed

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

FIELD NOTES: Western Union quietly acquired the eBillme platform in October 2011 and used it as the base for the March 2012 launch of its digital-payments and online-shopping product WU Pay. WU Pay incorporates the basic features of eBillme. Customers who use WU Pay aren’t required to share any account, credit card, or other financial information to do a transaction online. An online shopper selects the eBillme option at checkout and is directed to her bank’s Web site for authentication and transaction approval. Payment comes to WU Pay, which guarantees the funds and forwards them to the merchant. The procedure is the same for customers using WU Pay on WesternUnion.com to make money transfers.

ZipZap

Parent: ZipZap Inc.

Headquarters: San Francisco

Year Founded: 2010

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

2011 Transactions: Not disclosed

Pricing: Not disclosed

FIELD NOTES: In January, ZipZap announced the launch of its Global Cash Transaction Network following a venture-capital investment led by Blumberg Capital with participation from TriplePoint Capital and Fashionmall.com founder Ben Narasin. ZipZap offers a payments service for consumers to use cash to make purchases, pay bills, and fund e-wallets, prepaid cards, and mobile accounts online. ZipZap has a global network of more than 700,000 payment centers, including banks, post offices and grocery stores. CashPayment, the first in a suite of cash-transaction products, also launched in January. Consumers select CashPayment at the time of checkout, print an auto-generated payment slip that includes the nearest payment center location, and complete the transaction by paying cash offline at the center.