Canright Financial

Vendors Promote International, Echeck Payment Options at IRCE

June 13th, 2012 by Canright Communications

My conversations with epayments exhibitors at the Internet Retailer Conference & Exhibition (IRCE), held June 5-8 in Chicago, brought two ecommerce payments themes to the fore: international payments and echecks.

The first seemed natural to me, as ecommerce frees retailers from geographic boundaries.

The second theme, the promotion of the echeck as a payments mechanism, surprised me at first, given that the technology is hardly new. It also delighted me because I prefer echecks to credit or debit cards as a web-based payment mechanism and do not find that it’s often available.

I did not make a complete tour of every payment vendor at the show, but here’s a rundown of the vendors I visited and conversations we had.

International Payment Options

When I mentioned to Allyson Stramotas, a marketer for Digital River, that a number of vendors were talking to me about international payments, she assumed I must have heard a lot about China. I had not, though I later found in my conference bag a card presenting the statistics for Alipay, China’s leading third-party electronic payment service. Geographically, a number of vendors pointed out their capabilities for Latin America in general and Brazil specifically.

For instance, Cobre Bem, based in Brazil, provides a PCI-compliant gateway to Brazilian and Latin American banks, providing connections to more than 80 different financial institutions and bank card organizations in Latin America. For its part, Digital River World Payments covers Latin America and Asia in its white paper “Online Payments in the BRIC Countries.”

Other international payments processors I talked to included Moneris Solutions, a joint venture between Royal Bank of Canada and the Bank of Montreal, which partners with BMO Harris in the United States. Moneris provides a whole suite of payment options, including loyalty programs and echecks, for retailers. They stressed the completeness of their solutions across all needs, from store to web to company accounting.

Payza and Order Bridge showed payment platforms. Payza, with an international gateway, presented an ewallet service that can be loaded through bank transfers, wires, credit cards, and other means, allowing you to both make and receive payments. Order Bridge seeks to make it easier to integrate a wide variety of payment, risk-management, and transaction tracking options into a merchant’s website.

2CheckOut exhibited its online payment processing service that integrates a merchant account and payment gateway in a single package, another way of making it easier for retailers to accept online payments. The 2CheckOut shopping cart seeks to open retailers to international customers by presenting international currencies upon checkout, which also supports 15 different languages. It does not require shoppers to create a separate payment account.

Several other vendors emphasized supporting international payment and currency options directly on a retailer website. JCB, a Japanese payment card, wants merchants to accept the card and display its logo on their websites and in their stores. “Japanese consumers love American goods,” said sales rep Charles Spatola. Providing a payment option they know and use will increase the likelihood of making the sale.

Planet Payment made a similar case for international currency support. The company provides in-store and ecommerce payments processing in international currencies so that shoppers can use their local credit cards at a store’s point of sale or see their currency symbol on the website. They receive a guaranteed exchange rate upon checkout, and Planet Payment ensures that it’s lower than other options, as a reason for the customer to buy more goods at the foreign exchange rate.

PacNet Services Ltd., however, impressed me with its comprehensive international payments processing. They did it with the most impressive piece of collateral from an educational point of view: the World Payments Guide 2011, a 720-page reference book and online guide to banking systems and consumer payments in every country in the world, including an explanation of PacNet capabilities.

Echeck Options

The cost of payments filtered into the general media last year with the Durbin Amendment, which directed the Federal Reserve to place limits on the fees banks can charge for debit-card payments. For many years, credit- and debit-card processing fees have been roughly the same for retailers, regardless of who does the processing.

I believe that the increased promotion of echecks, an option that has been around for seven years, is driven in some way by today’s post-Durbin environment, in which transaction processing fees are no longer a standard three-plus percent. Electronic checks, which process as low-cost ACH transactions, provide lower transaction costs and can provide yet another option for consumers.

First Data argues as much in the latest version of an echeck white paper, which the payments processor provided at IRCE, “Electronic Checks: The Low-Risk, Low-Cost Way to Accept Online Payments.”

ACHFederal stressed the low cost and customer convenience of echecks. I agreed, as I prefer to pay by electronic check when it’s offered by a merchant, which it generally is not.

Payment fraud also arose as a topic of conversation, especially at the Authorize.Net booth. The company’s parent firm, CyberSource, estimates that merchants lost some $3.4 billion to fraud in 2011.

Finally, my favorite payments vendor of the show was Wipit, a service that allows online merchants to serve people without bank accounts (generally known as the “unbanked”). Unbanked customers use mobile devices that they load up at currency exchanges and mobile phone stores, explained Ian Williams, manager of business development.

Wipit allows them to open an account that they can add cash to in the same way. When they buy on the web, they choose the Wipit icon and pay from their Wipit account. The company has received a lot of attention since its founding in 2010, in part following FDIC concerns for the unbanked.

Whether it’s accepting cash, international payments, or echecks, the vendors face a common challenge: getting their logo for their payments option on a retailer’s website. That, in turn, depends on whether retailers believe that they can use payments channels to open new markets, increase sales to existing customers, or make paying at online checkout so easy that the customer rarely abandons the transaction.

Electronic Toll Collection Gets Easier

June 4th, 2012 by Canright Communications

Since August 2008, I have made at least one annual road trip from Chicago to New York state. Last week, my wife and I made our last drive to New York to see our daughter graduate from Bard College.

When we got to the New York State Thruway, I pulled into the cash-only lane, only to find that my Illinois I-Pass electronic toll transponder paid my fare. I don’t recall that ever happening. I remember that on the last trip, I pulled out my cash in New York, as I had done in Ohio on our first trips.

On this trip, it was electronic toll collection from end to end, beginning at the Chicago Skyway, to the Indiana Toll Road, across Ohio on its turnpike, and then into New York. (We took the northern route this time and skipped the Pennsylvania Turnpike, which is considering a plan to move to all-electronic toll collection.)

All of those states are now members of E-ZPass Group, an association of 24 toll agencies in 14 states. E-ZPass says it’s “the world leader in toll interoperability, with more than 22 million E-ZPass devices in circulation.” The E-ZPass usage statistics show a nearly 22 percent increase in E-ZPass transactions from 2005 through 2011. E-ZPass is not a universal electronic toll collection system, however.

From a consumer point of view, system interoperability (in this case, the ability to use one system on multiple toll roads) is wonderful because it saves time with faster toll paying and decreased traffic congestion. “E-ZPass has shaved at least seven billion traffic-jammed hours from our collective lives,” writes David Segal in a May 19, 2012, New York Times article. The U.S. General Services Administration, in its electronic tolling portal, adds that the systems also “increase fuel economy and reduce vehicle emissions by reducing the time spent in lines at toll booths.”

As in many areas of epayment, the U.S. may have spawned the technologies first but adopted them later. I recall the first electronic tolling system I came across when driving outside of Toronto, Canada, back in 1998. There is a decent, if uneven, overview article on electronic toll collection, its uses, and history across the world on Wikipedia, which also has an article covering the history of E-ZPass. For information on electronic toll technologies, visit Transcore, one of the world’s largest providers of electronic toll collection and other transportation systems.

There are problems, of course. Segal’s article carries the title “Trouble at the Tollbooth”. It focuses on a $50 E-ZPass fine that a woman received in the mail. She thinks the fine is unfair, and she doesn’t appreciate the company’s tone one bit.

We experienced something similar, though it resulted only in inconvenience. We did not have our I-Pass transponder once while driving the Indiana Toll Road and accidentally got in the wrong lane. Although we were able to pay by debit card in the noncash lane, the instructions on the card reader were vague and required a call to the toll attendant, who had to manually enter my debit card number into her terminal and raise the gate for us.

In addition to interoperable transponder-based systems, multiple and reliable methods of epayment at toll booths will be required to make toll payment even faster and easier.

Wallet Wars in the Streets of Chicago

March 10th, 2012 by Collin Canright

There is a war going on for your wallet. The combatants are credit card companies, banks, and tech companies both established and emerging. Until recently, most of the operations were covert: contracts, alliances, M&A, and other business activities that by and large go unnoticed by the general public.

The war is now spilling onto the streets of Chicago. From cabs to trains to restaurants to bus stops, there are early signs of emerging epayment technology adoption, with plenty of territory where epayment solutions are desperately needed. All the while, the largest epayments players with pockets deep enough for advertising campaigns are battling for public mindshare.

Read the rest of the article in the March issue of Transaction News (p. 5). Much of the article first appeared as Built in Chicago blog posts.

What’s your experience with epayments? Let me know.

Wallet Wars in Chicago

February 5th, 2012 by Collin Canright

MOBILE PAYMENTS: P2P EPayment and Mobile Wallet Ads Battle at the Bus Stops

If you’ve walked up State St. in Chicago’s Loop or along the Magnificent Mile on north Michigan Ave. you’ve likely seen Citi’s ads for Google Wallet. They’re on about every other bus stop.

If you’ve been at the bus stop on the northwest corner of State and Madison, you may have noticed that Chase’s ad for its QuickPay personal-to-personal (P2P) payments faces the inside. . .

Chase Person-to-Person QuickPay Ad

while Citi’s ad faces the outside.

Citi Google Wallet Ad

If it’s really a battle for mindshare, Citi and Google are ahead through sheer quantity. I have only seen one or two of the Chase ads, compared to dozens of Citi ads.

The approaches are very different as well, as are the applications. Citi’s charges a Citi credit card through Google’s mobile phone wallet technology while Chase’s debits a Chase bank account. Citi’s can be used for purchases at the point-of-sale (if supported) while Chase’s is designed to pay an individuals that have email addresses.

Convenient for consumers and the ability to demonstrate how an approach makes all types of payments easier will, in the end, determine which approach consumers adopt. If the advertising is any indicator, however, Citi-Google will win not only the battle for mindshare but the war for consumer adoption.

For a perspective on how easy, or not, it is to use Google Wallet, read “Tapping Spree: How to Spend $100 With Google Wallet.” For an overview of which company will win the wallet wars and under which conditions, read “The battle for Mr. Costanza’s exploding wallet.”

First Square

February 2nd, 2012 by Collin Canright

MOBILE PAYMENTS:  A Chicago Cabbie Collects Credit-Card Fares with Square

Square, a mobile payments firm, became one of last year’s major epayments success stories. I read a lot about the firm, founded by Twitter co-founder Jack Doesey, over the past year, but I had never seen one of the devices in action until a week ago.

I gave my credit card to a Chicago cab driver, as I often do, with some trepidation because cabbies used to hate accepting the cards. This one pulled out his iPhone, fitted with a Square device and app, and swiped my card.

It was before 6 in the morning, and it woke me up. He handed me his phone so I could authorize the transaction, and off I went.

Undoubtedly, he uses Square because he collects his fees and tips faster than he does when he uses the POS device in the cab. Possibly, he also saves a cut to his tips taken by the cab company, as they do in San Francisco.

In any case, it’s a great example of how epayments are increasingly personal and how, yet again, internet and mobile technologies shift power to individuals over institutions.

Square Up

The P2P Payment Challenge

December 16th, 2011 by Collin Canright

This photo of the menu at Silver Spoon, the Thai restaurant in Chicago that my wife and I ate at this evening, tells a good bit of the person-to-person (P2P) mobile payment story:

Limit 2 credit cards per check please.

As survey after survey has shown over the past two years, debit cards are the fastest growing means of payments. As fewer people carry much cash, restaurants are faced with multiple debit and credit cards to settle checks.

Sliver Spoon apparently has had enough. Cashless patrons can always handle it the way writer-researcher James Richter and his buddies do: play credit-card roulette.

Clearly, person-to-person (P2P) payments are a problem waiting for an elegant solution.

CTA Approves Contactless Payments System

November 19th, 2011 by Collin Canright

The Chicago Transit Authority continues to add payment options, with a vote by its board of directors on Nov. 15 to install an electronic fare-collection system.

The system would accept contactless credit, debit, and prepaid cards, which would be tapped on electronic readers to make the payment. Contactless payments through mobile phones will also be supported. Currently, the CTA supports payments using magnetic stripe cards, contactless cards, and cash.

The board awarded the contract to Cubic Transportation Systems,  San Diego, which operates the current system. Contactless payment systems using both cards and phones are widespread in Europe and Asia.

The new system is expected to be operational in late 2013 and will serve as a model for the RTA and Pace. Transportation authorities in the region were required to build compatible payment systems under a bill signed by Gov. Quinn in July.

Read more:
Chicago Transit Approves An Open Fare-Collection System (PaymentsSource)

CTA plan would let riders pay fares with credit cards (Chicago Tribune)

MOBILE PAYMENTS: Google-Moto Implications for EPayments

August 19th, 2011 by Collin Canright

When a deal as large and as high profile as Google buying Motorola comes along, especially on a Monday morning, the words and analysis pour forth. Here’s a collection of links to articles on the deal, with an emphasis on epayments.

The American Banker’s payments website PaymentsSource writes on the merger’s implications for Isis, a mobile payment consortium consisting of the major mobile carriers and credit-card providers, in Motorola Unit Buy Could Give Google An Upper Hand Versus Isis.

Karen Webster, who leads the payments experts at Market Platform Dynamics, suggests that the merger could give Google an upper hand when it comes to mobile wallet technology. A direct influence on phone hardware may make a difference, she writes in Analysis: After Google Buys Motorola, What’s Next for the Payments Ecosystem?

One of the main things commentators are writing about, on this site and elsewhere, is Google’s ownership of Motorola’s patent portfolio. Here’s a list of the Motorola payment patents Google is acquiring.

Mobile payments have been in the making at Motorola, as well as the rest of the industry, for quite awhile. Check out this 2006 brochure for Motorola’s M-Wallet.

DATA: Open Data, Transparency, and Efficient Markets

July 23rd, 2011 by Collin Canright

Control of information and data equates to control of people and markets. Warnings from Milton to Orwell and the ideological struggle between capitalistic and socialistic market approaches increasingly result in greater wealth and freedom.

At Chicago’s Techweek 2011  conference, the evolution toward freedom and away from control  manifested in Friday talks through the benefits of greater access to raw data, whether government data or market data. Information drives democracy and business, and the internet economy is “democratizing” the data required for both. “Data is the rocket fuel of the internet economy,” said Aneesh Chopra chief technology officer of the United States at his Techweek keynote speech.

Tapping the vast trove of government data to create applications can help citizens get more from their government at less cost while making government operations more accountable. “Simple information transparency can reduce costs,” he said.

The City of Chicago and the federal government are both using public challenges for apps and other ideas. “We’re crowdsourcing ways to make the city more efficient by providing raw data feeds,” said John Tolva, chief technology officer of the City of Chicago, in his keynote.

Data feeds are updated regularly by the city and made available to app developers. To see what’s available, check out the City of Chicago’s Data Portal. It contains thousands of datasets, maps, files and documents, charts, etc. Just fascinating.

Federal challenges include Health and Human Services’ Community Health Data Initiative , listed through the Administration’s Open Government Initiative.

Open government and data transparency in the context of the Obama Administration’s healthcare IT innovation initiative were the major themes of Chopra’s talk. “We will democratize government data,” he said. As I expect of a representative of the Obama administration, he’s a terrific orator and inspiring speaker, focusing throughout his talk on success stories of individuals while weaving in details of program initiatives.

One hope is that the private industry will follow suit and release more data.  That appears to be the case with the Blue Button, which allows individuals to download healthcare data. It started in the Veterans Administration and has been adopted by other agencies and private health organizations and companies.

It was apparent to me that there clearly is money in healthcare innovation if you can mine data for insight into how to provide better health for individuals, less costly payment options, and more efficient operations for the whole system.

The theme of transparency, based on increased access to data, continued in the afternoon session on financial innovation. Moderated by Jeff Carter, a co-founder of Hyde Park Angles and former CME board member, the panel featured four entrepreneurs creating trading exchanges and infrastructure to support for new markets.

All of the firms are based on the premise that transparency is critical for efficient markets. Markets are not efficient if they are not transparent, and markets are transparent when sufficient data are available on sellers and trades. The availability of market data itself can lead to the creation of trading in markets that did not exist.

“With transparency comes benefits. One of those benefits is a lower cost of capital,” said Nic Perkin, president, The Receivables Exchange. The firm’s platform requires companies wanting to list receivables for sale on the exchange to provide public cash flow and balance sheet data updated quarterly, something the small and medium sized business rarely need to do. “We bring transparency and standardization to market that typically has not had it.”

The data available on private companies in the internet space, for instance, led to the creation of an investment market for those companies, noted Adam Oliveri, managing director at SecondMarket, “a leading online destination for accessing market data”. You could easily see things like membership growth so the private exchange had information to work with.

The word “democratization” and the importance of increased data cropped up in Friday’s talks from Chopra’s to Craig Newmark’s and again in remarks from the financial innovation panelists.  As Perkin said, “The internet democratizes everything.”

INNOVATION: Why Groupon is a Perfectly Chicago Company

May 28th, 2011 by Collin Canright

It’s hard not to read about Groupon, currently the most mediafied of Chicago companies. It’s got a What’s Hot tab on TechCrunch. It’s national burger weekend deals made Crain’s and other media, and it’s one of several pre-IPO companies cited as examples of a new tech bubble. Groupon brings a lot of tech start-up luster to Chicago.

All that attention–along with discussing innovation at last week’s MIT Enterprise Forum Chicago Whiteboard Challenge and reading Malcom Gladwell’s May 16 New Yorker piece on the story of creativity and innovation at Apple Computer and Xerox PARC–got me thinking about Groupon and its Chicago location.

Chicago is not technology like Silicon Valley or Boston. There is not the mass of high tech here out there. The mass of innovation in Chicago spans a much wider range of industries, as shown by winners of the Chicago Innovation Awards, now in their 10th year.

Chicago is manufacturing (food, healthcare, drugs), finance (economic thought and trading products), and media-entertainment (Oprah and improvisational comedy).

And retailing.

It’s retailing and advertising that I think of when I think of Groupon.

Like Chicago retailer innovators Sears, Wards, and Spiegel, Groupon is a retail sales organization. Like the old catalogs of those retailers, Groupon relies on a clever copywriting style for its pitches (not without its critics). It also relies on a savvy sales force (akin to buyers) to source and sell local deals. It’s a direct-response sales organization using email rather than postal mail.

Where else would Groupon be? Not the technology garages of Silicon Valley but the old Wards warehouse in Chicago. As Gladwell suggests with innovation, the new Chicago spirit of progress is a new incarnation of the old.