Payment Partners has launched its En-point Direct service to provide electronic funds transfer from overseas consumers’ banks to U.S. merchants. It hopes to capitalize on the fact that non-U.S. consumers hold fewer credit cards than U.S. consumers.
A group of former high-level executives at MasterCard and Visa is launching a payment vehicle for international Internet transactions--and it’s not credit-card based. Irvine, CA-based Payment Partners has launched its En-point Direct service which facilitates an electronic funds transfer from overseas consumers’ bank accounts to U.S. merchants. It hopes to eventually offer the service to overseas merchants selling to customers outside the merchant’s home country.
Payment Partners’ new product zeroes in on the fact that overseas consumers do not carry credit cards to the same extent that Americans do. The company says that 30% of visitors to U.S. online retailers are from foreign countries. Many fail to buy when they are presented with payment options limited to credit cards. Payment Partners’ new product creates an ACH-style transaction, but adapted to fit the banking laws and customs of foreign countries.
The biggest difference between how U.S. shoppers pay with what has come to be called an e-check and how consumers in most of the rest of the world pay is that in other countries, the consumer must initiate the transaction. Consumers must instruct their banks to transfer the funds to the recipient’s account. In the U.S., the recipient can instruct the bank to transfer the funds.
Under the En-point Direct program, at checkout, Payment Partners provides currency conversions and shipping fees so the buyer knows the price in local currency. The buyer then provides the banking information and the En-point Direct server provides the deposit information. At that point, the ordering process is completed, but then the buyer must take the additional step of providing his or her bank with the payment information to effect a transfer from the consumer’s account to a transfer account maintained locally by Payment Partners. When the transfer is completed, the order is considered paid and the merchant can ship the product.
Payment Partners subsequently transfers the money to the merchant’s account in the U.S. using the ACH. Payment Partners has banking arrangements in 20 countries.
Because overseas consumers are used to initiating the transfer of funds, Payment Partners does not expect a significant number of customers to not follow through on the sale. “The only way to complete a sale today is through an international wire transfer, and since this is so much easier than an international wire transfer, we’re not expecting significant drop-off,” says David Roddy, an investor in and consultant to Payment Partners.
Payment Partners will market the service through banks and independent sales organizations, as well as through developers of e-commerce shopping cart software. The company has some retailers signed up for the service, but has signed non-disclosure agreements and so can’t reveal who they are.
Management and the board of Payment Partners is almost a Who’s Who of Visa and MasterCard through the 1980s and 1990s. Chairman is Charles T. Russell, CEO of Visa International for nine years. CEO is Greg Bjorndahl, former senior executive at Visa. Treasurer and senior vice president, international, is Tom Cleveland, former CFO, group executive vice president and treasurer of Visa. Payment Partners’ board includes Roger Peirce, former COO of Visa. Adviser to the board is Alex “Pete” Hart, former president of MasterCard International.