HomeATM in BusinessWeek

SmartCard Marketing Systems Inc. Signs Significant Agreement to Expand Capability of PIN Debit Terminals to Include Standard Credit Card Merchant Processing Services

SAN ANTONIO, Feb 26 /PRNewswire-FirstCall/ -- SmartCard Marketing Systems Inc. (Pink Sheets: SMKG) announced today the signing of a significant agreement with Payment Data Systems (OTC Bulletin Board: PYDS) and HomeATM Payments to extend merchant acquiring services through the breakthrough HomeATM technology that Velocitymoney.com incorporates in its financial offering to consumers and merchants.

SMKG President Bruce Baillio said, "The HomeATM is an important addition to our VelocityMoney.com payment platform. VelocityMoney.com is positioning itself to be the new standard in online wallets, money transfer and payment processing platforms. We want to be faster, less costly and give more value than the other online pay sites or Money Service businesses with the unique card present services of PIN Debit and Credit Card which has never been possible prior for such a low cost.

This new agreement adds complete credit and debit card processing capabilities to qualified merchants, online or brick-and-mortar, using the HomeATM device. The revolutionary feature of this product is its tremendous power and incredibly low cost. We can give an online or retail merchant highly secure, military-grade encryption for all his/her credit or debit card transactions at very competitive rates through a USB device for less than $50 installed - an industry wow."

The original HomeATM device is a patented online payment solution for individuals and merchants. It uses the most comprehensive authenticity and verification technology available. VelocityMoney.com has seamlessly integrated this device into its payment platform, so anyone can securely and instantly move money from a debit or check card into their VelocityMoney.com online wallet for further usage.

Mitchell Cobrin, HomeATM's COO stated, "We are pleased to add standard credit card merchant services to our one-of-a-kind Debit processing technology. Although no other service provides online merchants our unique benefits of no reserves, guaranteed instant funds, no delays in funding and low price, the additional capability that this agreement brings gives our customers the complete range of card payment options, expanding our reach to brick-and-mortar merchants as well as online merchants." As Mitchell likes to say, "Imagine being able to transfer money ANY time, ANY where. That is what VelocityMoney.com and the HomeATM have accomplished."

SMKG CEO Massimo Barone stated, "We believe strongly that this will lead to immediate results in new merchant orders as well as orders from Merchant's switching over from traditional Point of Sale terminals that are more costly to maintain and operate and this does not include the direct benefit made to businesses on the go that desperately require payment solutions for their businesses on the go."

We seek safe harbor.

SOURCE SmartCard Marketing Systems Inc.

PIN Debit for the Web

Payment vendor woos e-retailers with promise of lower transaction fees

Online retailers consistently complain about the high fees they pay on credit card purchases, typically 2% for big e-retailers and considerably more for smaller ones. Start-up HomeATM ePayment Solutions says it has a way to reduce those fees significantly, although some payment experts, as always, are skeptical.

HomeATM has developed a small magnetic stripe reader with a personal identification number, or PIN, pad that can be plugged into a personal computer. That would enable a consumer to swipe his debit card and enter his PIN, just as he would at an ATM or at store checkout counter, sending the transaction through the debit networks that typically charge lower fees than credit card networks, according to Mitchell Cobrin, chief operating officer.

While PIN debit interchange varies with the network and type of merchant, it typically ranges from 40 cents to $2 per transaction, and in some cases is a flat fee, as opposed to a percentage of the purchase amount, as with credit card transactions. Merchants will be able to save 1% to 2% per transaction in many cases, Cobrin says.

His hope is that large online merchants will give the readers to loyal customers. He says the readers cost about $5, and that merchants will soon make back that investment if repeat customers pay with PIN debit cards instead of credit cards. “The financial metrics become compelling for a retailer like Amazon, Wal-Mart or Costco to give away these devices for free and incent the consumers to use it, because they’ll save money every time,” Cobrin says. He notes, however, that it often takes a long time to convince such large retailers to adopt a new payment method.

HomeATM has also come up with a way to use the PIN-entry devices with credit cards for consumers who prefer that method of payment. This system, called PinMyCard, would require a one-time registration by the consumer who would swipe his debit card and enter his PIN to verify his identity. He would then choose a credit card PIN for use with subsequent purchases. Cobrin says that could lead to merchants being charged card-present rates that are lower than the card-not-present rates e-retailers typically are charged.

There are about 5,500 of the HomeATM devices in the field and a handful of merchants accepting transactions, although Cobrin did not name them. The company has announced a deal with Universal Air Travel Plan Inc., a Washington, DC-based payment network owned by airlines from several countries, to offer the HomeATM device to member airlines.

Universal Air Travel Plan continues to expand its partnerships into alternative forms of payment with HomeATM, utilizing UATP`s existing connections with the airlines to offer a new form of payment option for consumer use," Ralph Kaiser president and CEO of UATP, said in announcing the agreement last month.

While the lower interchange of PIN-debit networks may seem appealing, merchants may not find HomeATM saves them much when all costs are considered, says Jay DeWitt of consulting firm Glenbrook Partners. Even if the device costs only $5, it will cost at least another $5 to send it out and support it, bringing the cost to $10 or more. And then merchants will have to persuade customers to use it. “Are there going to be enough customers doing enough transactions so that the interchange differential is going to be enough to pay for distributing and supporting those readers?” DeWitt asks.

As for PinMyCard turning online purchases into card-present transactions, DeWitt says it will be up to credit card networks like Visa and MasterCard to decide whether they accept that logic.