Three banks in France have launched Paylib, a PayPal-like online payment system and they're betting that France is just different enough that they can succeed on their home turf with a strategy that has had mixed results in the U.S.
BNP Paribas, Société Générale and La Banque Postale are working together to create Paylib as an online and mobile payment system for their consumer and merchant customers.
Whereas U.S. banks have tried for years to topple PayPal, probably 85% of online transactions in France are made with a regular bank card; people feel like it works perfectly to pay by card online, says Jean-Paul Albert, head of card products at Société Générale.
Because the banks already hold the consumer accounts, a shopper can pay an online merchant through Paylib without having to provide card details at the point of transaction.
We want to be relevant for the next generation of payments and secure market share in ecommerce, Albert says.
Bank-run PayPal competitors include the ill-fated Citigroup c2it and Wells Fargo Billpoint the latter even had eBay on its side before eBay and Wells Fargo both gave up ahead of eBay's 2002 purchase of PayPal.
Wells Fargo's latest payments initiative is clearXchange, which is focused entirely on P2P and is run with Bank of America and JPMorgan Chase. ClearXchange has recently been looking for new banking partners to expand its reach after naming Wells Fargos Michael Kennedy CEO in September.
The three French banks are taking a similar strength-in-numbers approach with Paylib. "Any of us separately wouldnt succeed; none of us are big enough to impose a new standard in the market, says Albert. We had to join forces to get critical mass and solve the chicken and egg problem.
Facilitating person-to-person payments is relatively easy to do, says Gil Luria, a vice president at Wedbush Securities. But its much harder to facilitate person-to-merchant payments because the banks will have to convince merchants to accept Paylib.
Signing up merchants to accept a payment method is what Google has been trying to do for seven years and Visa for the past year, Luria says. It takes a lot of effort to convince retailers to accept this type of payment that no one yet is using.
Paylib has an advantage, Albert says, because the banks already have many merchant customers.
Visa launched its digital wallet, V.me, in November 2012 and pitched it to merchants through its payments gateway, CyberSource, and other companies.
Visa, in a June presentation to investors, disclosed that 240 merchants signed up for V.me, with 35 live at the time, according to a transcript. Visa emphasized that these are large and mid-market merchants, representing $25 billion in e-commerce volume, but Luria says the number of signups seems low. He estimates CyberSource alone has 400,000 customers.
What [Visa] found out is that they arent solving any problem that no one is already solving today, Luria says.
In an email this week to PaymentsSource, Visa would not disclose the number of V.me accounts but said the product is available to tens of thousands of merchants.
V.me replaces Visa's ill-fated Rightcliq, which launched a year earlier as a combined wallet and online shopping portal.
Eight large merchants in the French market, including vente-privee, an organized sales website with more than 12 million users, are already committed to accepting Paylib, Albert says.
With the rise of mobile commerce, typing in card details on a small mobile screen isnt practical, Albert says. According to IFOP market research, an alternative payment method is likely to increase by 47% the shopper's intent to buy, he says.
When customers enroll for Paylib, they choose which bank card theyd like to be linked for purchases. They then enter a username and password when making a purchase with a merchant that accepts Paylib.
For purchases from a mobile website, customers also provide a one-time passcode they receive via text message. On a PC, Paylib requires the one-time code only for high-risk purchases.
Merchants using the system must either bank with one of the three banks or use one of the initiatives partner merchant gateways, such as Atos Worldline, a European payment services provider. Paylib guarantees payment to the merchant, and each bank retains its customer information.
Currently the three banks cover 50% to 60% of all e-commerce in France, Albert says. After new partnerships with payment providers go live, Paylib will cover 75% of e-commerce on the merchant side, he says.
Société Générale has more than three million online banking users, with 1.3 million using its mobile app. While not all of these users have cards with the bank, most will be targeted with the Paylib initiative, says Albert.
Combined, all three banks have about 23 million customers, Albert says.