Merchants turn to more payment options to support growth

Niche Retail LLC plans to launch up to seven e-commerce sites this year, up from the 18 it already operates, and one way it expects to attract new customers is by offering alternative forms of payment like Secure-eBill, which lets shoppers pay through their personal online banking system, CFO Mike Galloway tells InternetRetailer.com.

Secure-eBill, from ModaSolutions, is one of several new forms of alternate online payments that target consumers who either don’t have credit cards or choose not to use them for online purchases. Among others are Saf-T-Pay Inc., which also relies on payments through online banking; Retail Expansion Network Inc.’s PaidByCash, through which online shoppers pay cash for temporary debit cards acquired at local stores; and Cyphermint Inc.’s PayCash Mobile Wallet, which lets consumers use their cell phones to make online purchases from a stored-value card.

The alternative payment methods, by avoiding credit card payments networks, enable merchants to save on the costs of interchange fees—about 2% of transaction value—paid to payment card companies. “We save about 33% per transaction with Secure-eBill,” Galloway says.

But the main reason Niche Retail opted to accept Secure-eBill payments was to attract more customers among the young families it seeks to sell things like baby strollers and car seats, he adds. “We’ve had a fair amount of inquiries from customers asking about alternative forms of payment, so alternative payments will definitely be a larger part of future transactions,” Galloway says. “Just offering different methods helps to attract customers.” Niche Retail is No. 359 in the Internet Retailer Top 500 Guide.

Although credit cards still account for about 99% of Niche Retail’s sales transactions, the retailer figures that alternative payments will become more important as consumers become more accustomed to using online bill payment and other payment methods other than credit cards.

To use Secure-eBill, shoppers click its logo during the online checkout process, then receive an e-mailed bill. They then log onto their personal online bill pay system to complete the purchase. Secure-eBill charges merchants about 1% of the value of each purchase transaction and guarantees payment before the retailer ships the order.

Saf-T-Pay, launched in January, also e-mails an invoice to online purchasers who pay through their online bill-pay system. But shoppers pay Saf-T-Pay itself, which then pays the merchant to guarantee payment. Saf-T-Pay also works with banks to develop marketing programs on behalf of retailers, e-mailing special offers to lists of bank customers based on demographics and other data that indicate shopping preferences, says CEO Manuel Montero, a former executive of American Express Co. It also partners with International Checkout, which provides fulfillment services for e-retailers that ship internationally.

Saf-T-Pay is building its customer base by partnering with online shopping carts, including UltraCart from BPS Info Solutions Inc. and Europe-based xt:Commerce.

PaidByCash, which launched last month, has partnered with major supermarkets, convenience food stores and drug stores throughout the U.S. to let online shoppers pay with a temporary MasterCard debit card, says CEO Michael Marubio.

To use the service, online shoppers click the PaidByCash logo in participating merchant’s shopping cart to receive a code related to their transaction. The shopper then takes the code number to a participating brick-and-mortar store and uses cash to pay a $4.95 for a temporary debit card. The shopper also pays to load the card with enough value to cover the online purchase, but can opt to load more than the value of the intended purchase, or up to $350, to cover the cost of additional online purchases.

The Cyphermint PayCash Mobile Wallet, also launched last month, provides consumers with online access to a co-branded PayCash-Visa stored-value card for making online payments from a cell phone. Users can add value to their cards with money orders or direct deposits from their checking accounts.