Some retailers launched online deals well in advance of Thanksgiving, Black Friday and Cyber Monday.
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Payment processor CardinalCommerce has announced it will offer Mazooma to its 30,000 merchant clients.
Pros: Doesn’t require banks to sign up.
Cons: Consumers may be leery of providing bank sign-in information. Mazooma does not store the user name and password, and data is encrypted for transmission, says president Sean Kelly who concedes Mazooma will have to do a good job of communicating this to consumers.
Banking on banks
Moneta, which also launched this year, emerged out of Checkfree Corp., a major provider to banks of online bill-payment services. Moneta aims to partner with retail banks, offering them a share of merchant fees in exchange for banks enrolling established, and presumably low-risk, customers, says Sacchi, Moneta’s CEO. For consumers who accept the offer, banks can fill in customer data, making enrollment easy, he says.
To pay with Moneta, a consumer enters her Moneta user name and password, and a confirmation screen-which can be bank-branded-pops up in which she approves the purchase from a web retailer.
Payments go through the automated clearinghouse system, a low-cost system banks use to settle transactions among themselves, usually overnight. The merchant typically receives payment the following day, Saachi says.
Pros: The consumer completes the purchase in one step, says Jim Keller, senior vice president of ShoeBuy.com, an early adopter of Moneta. He sees it as complementary to eBillme, which is a two-step process but requires no prior registration.
Cons: Bank support is crucial to Moneta’s strategy. Saachi says he expects to announce deals with banks within the next few months.
Also, there is a small chance that a transaction will be approved at the time of purchase, but that the funds will not be available because the actual debiting of the bank account takes place hours later. Set-up fee is a hefty $25,000; Moneta is waiving that through June.
Consumers who use debit cards in face-to-face purchases prefer entering a personal identification number, or PIN, to signing for the purchase, by 45% to 35%, with 20% having no preference, according to a BAI Research survey last year. PIN-debit users consider it more secure, faster and easier, BAI says.
The roadblock to using PIN-debit online has been how to enter a PIN without exposing that crucial data-which can be used to draw cash from a bank account-to hackers.
Acculynk’s PaySecure solves that problem this way: it pops up a PIN pad, but the order of the numbers varies each time; the consumer clicks on the numbers of his PIN; Acculynk captures only the coordinates of the clicks, not the numbers selected, and in its host computer reformats that into the PIN. The PIN pad only pops up if the consumer enters a debit card number of a participating bank.
Three large debit networks, Pulse, Accel/Exchange and NYCE, plan to test the system. And online payment processor Chase Paymentech expects to work with a few merchants on a pilot this spring.
Pros: Some consumers like the security of PIN-debit. The interchange he’s paying with PaySecure is 20-30% lower than what he pays on signature debit transactions, says Corey Tisdale, chief operating officer of e-retailer ShoppersChoice.com, who has tested the system.
Cons: Consumers may be reluctant to enter their PINs online. Banks may not want to push PIN-debit because they get more income when consumers use debit cards without entering a PIN.
Noca Inc. began testing this year its Secure Check system, which mimics writing a check. At checkout, the online shopper is presented with a check with the purchase amount filled in; she fills in her name, address, a check number, bank account number and the bank routing number at the bottom of paper checks. (A similar check-like payment method called MyECheck has been available since 2004.) Subsequently, she can verify this information with a single click.
The transaction is sent through the ACH and the merchant is paid in two to three days, says Pankaj Gupta, founder and president.
The big selling point is a very low merchant fee: 0.25%. That’s great for merchants selling low-ticket items, says Johannes Bhakdi, CEO of online self-publishing service Klatcher that’s testing Secure Check. He says the credit card fee on a $5 purchase would be around 45 cents; Noca’s fee would be just over a penny.
Pros: Any consumer with a bank account can use it. Very low fee.
Cons: Consumers may be reluctant to enter a bank account number, and may be confused about what a routing number is. Not a real-time transaction, so merchants are not guaranteed payment for a few days. Gupta says a real-time version is in the works.
Indeed, many of these systems are still works in progress and none has been adopted by large numbers of consumers. Most online retailers figure to wait to see which, if any, of these debit options gains traction before adding a new way to pay.
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