September 9, 2004, 12:00 AM

Mer-Tec sees a macro market for micropayments

Payments Processor Mer-Tec is rolling out a new product aimed at the emerging micro-payments market called SecureCastle.


Mer-Tec, a provider of payment processing services to online retailers such as Tower Records and Longs Drug Stores Corp., is rolling out a new product aimed at the emerging micro-payments market.

Mer-Tec’s SecureCastle product is in the final stages of development and will be fully available to the Internet retailing market in late September or early October, says Mer-Tec president James McIntosh.

Micro-payments are for transactions between $1 and $5 and represent a payment typically tied to an e-check, debit card or stored value card.

As an alternative to paying higher interchange rates with credit cards and offering their customers more payment alternatives, more web merchants are looking at micro-payments programs, McIntosh says.

A particular web retailing niche Mer-Tec will target are the growing ranks of download music providers. “With downloadable music, a retailer is only looking at maybe a $1 per-transaction fee and between royalty payments and paying an interchange fee tied to a credit card they would be hard pressed to make a profit,” McIntosh says. “For a retailer such as that, micro-payments are an alternative.”

Mer-Tec will market SecureCastle directly to web retailers and isn’t likely to set up any reseller networks, McIntosh says. The revenue model for SecureCastle is based on retailers paying Mer-Tec a yet-to-be determined portion of the transaction.

Mer-Tec will handle all payment duties for web retailers signing for SecureCastle, including setting up individual accounts for shoppers, supplying them with personal identification numbers and integrating the micro-payments application into the merchant’s shopping cart. A customer would fund their own stored-value accounts hosted on Mer-Tec’s secure service and Mer-Tec will process the transaction.

“SecureCastle will appear as one more integrated payment option on their check-out page,” McIntosh says. As a former executive with a long history in retail point-of-sales systems and online, real-time transactions processing, McIntosh helped to develop CyberSwitch, an early Internet payment processing in 1995 for Tower Records.


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