New Online Processor GreenZap Looks to Credit Card Funding for Growth

GreenZap Inc., a San Diego, Calif.-based processor of e-mail payments that started up this summer as the latest competitor to PayPal Inc., has added acceptance of Visa and MasterCard cards to fund accounts, a move the company says will help it to more than double transaction volume. “The integration of credit cards is an enormous step in our overall development plan, putting us ahead of several of our competitors,” said Michael Bernstein, GreenZap chief operating officer, in a statement. Up to now, the processor's 300,000 users had to use certified checks to pre-fund accounts, which they then use to send money to anyone with an e-mail address. Accountholders can also use their accounts to pay for items on online auctions, and the company is seeking online merchants to accept payments it handles. In this way, the nascent company resembles PayPal, the transaction-processing arm of online auctioneer eBay Inc that has succeeded in this market over the past seven years while a number of other entrants?including one started by eBay itself?have failed. GreenZap, which takes dead aim at PayPal (even challenging the San Jose, Calif-based competitor to a game of dodgeball in a jocular article on its Web site), says it distinguishes itself in the market with flat user fees and a rewards program, called WebCash, by which users earn electronic “currency” they can use to pay merchants or transaction fees. Accountholders earn the currency when they enroll new users, a tack PayPal also used in its early days to help build its user network. GreenZap charges recipients of payments $2 per transaction. Holders of the company's upgraded Gold account pay $1. Like many payment networks, PayPal charges merchant fees based on a percentage with a flat-fee component, currently 1.9% plus 30 cents up to 2.9% plus 30 cents, depending on volume. GreenZap, which began operations this spring and opened its Web site in June, was acquired last week by NPW Development Inc.