This story appears in the April 2009 issue of Cards&Payments.

Despite the economic downturn, the payment industry continues to spawn new online payment technologies. Many of these, such as eBay Inc.'s PayPal and Noca Inc.'s Secure Check online-payment technology introduced last year, pull funds from consumers' bank accounts using the automated clearinghouse network.

NACHA's Secure Vault Payments differs by automatically directing consumers to their banks' online-banking Web sites to authorize each transaction. At least two other online-payment companies are also exploiting aspects of this feature.

The first is U.S.-based eBillme Inc. Launched in 2005, eBillme builds on consumers' growing tendency to pay recurring bills online through their banks' online banking Web sites. When a consumer selects eBillme as a payment option on a Web merchant's site, eBillme sends a "bill" to the consumer's online banking Web site.

The consumer must separately log into his bank's online banking Web site to pay the bill; the transaction is complete when eBillme sends the payment to the merchant. Merchants pay a processing fee of 1% of the sale, which is less than many other online-payment options. EBillme developed its payment technology internally.

Ebillme sweetens the incentive for consumers to go through the more laborious, two-step process with a 90-day guarantee that covers lost or damaged items and a rebate if the customer finds the same item for sale elsewhere for less during the guarantee period. Last year, the company tripled the number of consumer e-commerce transactions it handled compared with the previous year, says eBillme CEO Marwan Forzley. He declined to disclose the privately held company's sales or specific transaction data.

Unlike Secure Vault, eBillme does not require banks to install special software to offer the service, and because banks' participation is passive, it has helped to speed adoption, Forzley says.

"EBillme's edge is that it leverages existing infrastructure so that banks don't have to do anything to participate except offer online bill payment, and most already do," he says.

Merchants must add software to their sites to enable eBillme, which Forzley says can take from one to five weeks to install depending on the merchant's operations.

More than 200 of the Internet's largest retailers, including Tiger Direct and Buy.com, offer eBillme as a payment option alongside such other online-payment options as credit cards and PayPal, Forzley says.

But Forzley says eBillme appeals to customers who buy such commodities as office supplies, computers and electronic equipment online because it offers them more guarantees compared with some other methods. And when merchants offer eBillme, consumers choose it for 1% to 10% of all transactions through those sites, Forzley says.

Another evolving variation on the concept is SafeDebit, which Metavante Corp.'s NYCE Payments Network LLC last November announced it would pilot this year.

Through the latest version of SafeDebit, consumers making online purchases from participating retailers are redirected to their bank's online bill-payment Web site. Users log in through their usual method, and SafeDebit sends a unique, one-time-use debit card transaction-authorization code to the merchant. No actual debit card or account numbers are exchanged. San Jose-based Verient Inc. developed SafeDebit's payment technology.

Merchants must install SafeDebit software to offer the service. But like eBillme, any consumer whose bank offers online bill-payment services would be able to make purchases through a participating merchant's Web site via SafeDebit.

Metavante has not disclosed the merchant-software costs. It also as not yet announced pilot participants or merchant-transaction fees, but a spokesperson says transaction costs will be "very competitive."  CP

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