May 2, 2008, 12:00 AM

eLayaway offers online retailers a no-fee payment method

Consumers pay a fee equal to 1.9% of the purchase price, taking the place of the fee merchants pay credit and debit card issuers. Consumers can take up to 13 months to pay, and once they do the retailer ships the goods and receives payment.

Consumers pay a fee equal to 1.9% of the purchase price, taking the place of the fee merchants pay credit and debit card issuers. Consumers can take up to 13 months to pay, and once they do the retailer ships the goods and receives payment.

Fledgling online payment service eLayaway offers e-retailers a way to accept payments without paying credit and debit card fees. And it offers consumers a throwback payment method: pay for an item over time, then receive the goods once full payment is made, without the monthly shock of a bloated credit card bill.

One of the first companies to test the service says some cash-strapped consumers like it. “In this economy having a payment option for credit-conscious consumers is a big deal,” says Martin Berns, CEO of online loyalty program BSP Rewards. “From the comments we hear, they like the fact that they don’t increase their credit card debt.” ELayaway plays on that aversion to credit card debit with its slogan, “credit is overrated.”

While merchants pay fees on credit and debit card purchases, with eLayaway it’s the consumer paying a fee of 1.9% of the transaction amount. The consumer can pay in installments for up to 13 months, with the money held in escrow by retail bank HSBC USA Inc. Consumers need only be 18 or older and have an active checking account. Once the full payment is made, the merchant is paid and ships the goods. Consumers are charged $25 if they do not pay in full.

About 20,000 consumers have registered for the service. Since eLayaway went live in 2006, consumers have completed 1,800 transactions, with 97% of purchases completed, Bilello says. Another 17,000 payments are scheduled.

About 700 mostly small merchants offer eLayaway, Bilello says. That retailer number could grow now that online payment provider CardinalCommerce is integrating eLayaway into its Centinel payment platform, along with such other alternatives to credit cards as PayPal, Bill Me Later and eBillMe. That will allow the 33,000 merchants that use the Cardinal system to offer eLayaway if they so choose. That integration should be complete by late May, CardinalCommerce says.

“For consumers, eLayaway is the perfect package of convenience, buying power and security, all while remaining debt-free,” says Matt McDowell, vice president of merchant services at CardinalCommerce. “ELayaway’s zero transaction fees for all merchants who offer it on selected merchandise and services will not only be increasing their bottom-lines, but also converting sales with consumers who see value in using a non-credit based payment option in today’s economy and beyond.”

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