Monday, September 29, 2008

Is There a PayPal Killer in the House...Home...HomeATM?

Late last week, in a post entitled: Consumers Safer When Left to Their Own Devices, I talked about the simplicity, security and safety of HomeATM's ePayment Solution.

Simply put, HomeATM Provides Online Shoppers With the Ability to Swipe and Process Their Own Credit/Debit Cards, with Their Own Point of Sale (POS) Device Within the Friendly Confines of Their Own Home. My point is this: When online shopping, the "Point" Of Sale is where the consumer home. Therefore, that's where the "SwipePIN" device should be. No home should be without one if they intend to shop and buy online.

Assuming an online shopper desires (and they do) a secure transaction, then typing in their Personal Account Numbers (PAN) is not a good idea...period. Consumers wouldn't write down their account numbers when going to a bricks and mortal retail store, so why do we think it prudent to do it when visiting a virtual one online?

In recent past, we would "hand over" our credit and debit cards, but those days are over as now, those very same cards don't leave our hands. "We swipe our cards ourselves." The reasons for doing so are fraud/security related, so, if consumers want a more secure online transaction, then why wouldn't they do the same thing online? Fact is, they would.

Once a consumer is armed with a personal swiping device which never leaves the safety of their home they've protected themselves against keylogging, screen-scraping, wardriving, skimming and myriad other methods used by hackers to intercept online transactions. PIN Debit, (Swipe and Enter PIN) is the most secure way to purchase online, which is why it offers internet retailers the lowest possible Interchange Rate available. Oh, and did I mention that HomeATM offers about the easiest way in the world to securely send money to anyone anywhere in the world?

Here's an article from BusinessWeek talking about alternative payment methods, and which one might be a "PayPal Killer." The suggestions provided for alternative payments companies have all been met or exceeded by HomeATM's Swipe at Home Solution.

Despite the acceptance of credit cards and services like PayPal, the issue of getting money from one person to another online still offers opportunities for innovation.

Venture firms are continuing to fund startups that hope to offer better ways to pay online, while the growth of Software as a Service (SaaS) in the enterprise has led to a need for new tools in corporate billing management. Further out, buying items over a mobile phone presents a multibillion-dollar opportunity—if someone can make it easy.

Despite the early-mover advantage PayPal has, and the presence of rival offerings from Internet giant Google (GOOG), there are plenty of retailers who only accept credit cards for online purchases. That eliminates their ability to sell to those without credit and those concerned with security online.

There are a few ways rival online payment services can find success against PayPal, wrote Jim Friedland, an analyst at Cowan & Co. earlier this week, citing a few examples: providing a neutral independent platform (PayPal is owned by Web retailer eBay (EBAY)), extending credit to shoppers, and offering lower transaction fees.

Editor's Note: So the few ways rival payment services can find success against PayPal would be to:
  • Create the ability to sell to those without credit cards
  • Provide a more secure transaction
  • Offer lower transaction fees
  • Make it easy.
HomeATM covers all four bases at once:

Those without credit cards have an ATM card or debit card, so credit isn't necessarily needed. Swiping the card provides a highly secure transaction, (covered) and entering the PIN provides dual authentication, which is why Card Present PIN Authenticated transaction fees are significantly lower than the more risky Card Not Present (CNP) rates, (covered) and HomeATM does it with the same methodology consumers are accustomed to utilizing at a retail swiping their card into a POS device. Easy as 1-2-3-4.
The article continues...

And startups are still searching for other opportunities online. Just last week online bill pay startup eBillMe raised $12 million from Canaan Partners and New Celtic Ventures. The company offers vendors an alternative to credit cards by allowing shoppers to receive a bill at their online banking portal. This allows shoppers to avoid putting their personal information on the merchant's site and allows for a cash, rather than credit, transaction.

Mobile Payments to Climb

But online sales are no longer limited to the PC. U.S. consumers are starting to use their mobile phones to make purchases, and this could be a growing market in the years to come. But there are challenges ahead. Bigger players such as PayPal and credit-card companies already offer mobile-payment products, and the current U.S. market for mobile-pay services is still small.

Only 1.5 percent of U.S. consumers have ever used their mobile phones to make a payment, but almost 50 percent are aware that they can do so, according to a survey released this week. The research, commissioned by financial firm Mercatus, predicts that with better services and customer education the percentage of people who will make payments from their mobile phones is likely to grow in five years to 15 percent among those age 18 to 30.The growing use of smartphones and shopping sites optimized for mobiles require payment options that are easier than keying in a 16-digit credit-card number. Startups such as angel-backed Billing Revolution and Zong, which launched earlier this month after raising more than $12 million in venture capital, are tackling the problem of buying on your mobile phone. Zong sends purchase information to carriers, which then bill subscribers for their purchases, while Billing Revolution offers a mobile credit-card processing platform. In April, Obopay scored $20 million for its money-transfer-via-mobile efforts.

Enterprise Customers Are an Opportunity

While the opportunity in mobile is still just cresting the horizon, enterprise customers provide an immediate opportunity for startups seeking to streamline transactions. In March, two startups offering an online billing platform for companies delivering SaaS products raised money. Zuora brought in $6.5 million in first-round funding led by Benchmark Capital for its platform. Rival Vindicia announced a $5.6 million round led by DCM and Leader Ventures.

These companies aim to make it easier for SaaS vendors to track and bill all of their customers. They also help customers track and manage multiple software services they might be buying—a task akin to managing household bills from tens or even hundreds of service providers. Tim McAdam, a general partner with Trinity Ventures, says these sorts of billing platforms and ways to track payments still represent a big category and no one has mastered it yet.

With everyone searching for ways to make money online that don't revolve around advertising, offering seamless but secure online payments will go a long way in enabling alternative business models.

Provided by GigaOm

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Cisco Survey: Consumers Trust Online Payment Providers More Than Traditional Banks

Cisco's Internet Business Solutions Group has announced results of a survey finding that "important consumer segments such as baby boomers trust online payment providers more than they trust traditional banks."

"Consumers are demanding the same convenience they receive online when shopping in a brick-and-mortar environment. This dramatic shift in consumer expectations presents a considerable market opportunity for financial institutions that embrace connected commerce. The average incremental value of connected commerce for the top 20 U.S. banks is estimated to reach more than $100 million yearly by 2015.

In an effort to help clients stay competitive and increase their profitability, Cisco IBSG, the company's global strategic consulting arm, surveyed more than 1,500 consumers to better understand how their behaviors and perceptions shape the evolving commerce landscape of shopping and payments. By monitoring what innovative companies are doing to attract and retain customers in retail and related industries, Cisco IBSG helps financial institutions take advantage of leading, innovative practices to remain relevant.

The research reveals that evolving customer preferences among all age groups represent both a challenge and an opportunity for financial institutions. As consumers increasingly use the Internet and mobile devices to make purchases and payments, banks are subject to both customer attrition and revenue loss. The research also shows, however, that banks can reverse this trend and use their connections to merchant and consumer payment data to create new revenue models from advertising, cross-selling and value-added services surrounding points of sale"

"Retail financial institutions are uniquely poised to enable the next evolution of connected commerce," said Jim Greene, vice president and global head of financial services, Cisco IBSG. "The profound shift in consumer shopping preferences, coupled with the pervasiveness of the network, presents a tremendous opportunity for financial institutions to evolve from simply being a provider of the payment element of a purchase, to being a uniting factor among consumers, merchants, advertisers, product manufacturers and payment providers."

Consumers Prefer the Online Channel

Historically, the online shopping experience was designed to imitate the brick-and-mortar experience. The Cisco IBSG survey results show that now, coming full circle, the brick-and-mortar experience must resemble the online channel to meet the shifting expectations of consumers.

The survey suggests that the physical-store experience is increasingly falling short of consumer expectations:

  • 50 percent say the checkout process takes too long
  • 48 percent say items aren't in stock
  • 46 percent say they can't find the items they want
  • 22 percent say they don't always have applicable coupons or offers with them
  • 20 percent say it is hard or time-consuming to keep track of receipts

    As consumers' expectations rise, merchants, advertising agencies and new financial services entrants are all trying to capture consumer attention at the point of purchase and, in some cases, to disintermediate traditional payment players. The threat to existing banks is evident: 87 percent of those who use the services of alternate payment providers (such as PayPal and Obopay) indicated a strong interest in using mobile Short Message Service (SMS) or a similar method to initiate payments in physical stores. The PELORUS Group estimates that by 2010, payments made via emerging methods such as radio frequency identification (RFID), SMS, and biometrics are expected to grow to $400 billion. In addition, 23 percent of all survey respondents expressed interest in using a mobile device to make contactless payments in physical stores, and that number is only expected to grow. Two-thirds of current mobile banking users expressed interest in "swiping" a device embedded with a chip at the point of sale.

    "Consumers not only recognize the conveniences enabled by the Internet but now also require the totality of their shopping experiences to afford those same benefits," said Greene. "Given their current interaction with both consumers and merchants, banks are in a unique position to provide these 'connected' propositions and the insight that leads us into 21st-century commerce."

    How Financial Institutions Can Compete

    Through the study and its proven success working with 80 of the 100 largest global financial services organizations, Cisco IBSG identified the consumer segments with the highest likelihood of engaging with banks for connected commerce services. The survey also identified the most important ways in which financial institutions need to change their interactions with consumers in order to remain relevant in today's market. To increase their competitiveness, banks must:
  • Provide superior commercial services with greater transparency, security, speed and flexibility
  • Use their relationships with, and access to, both merchants and consumers to provide new revenue sources to the merchants and value-added services to consumers
  • Help consumers make sense of their spending patterns and provide guidance and recommendations
  • In collaboration with the merchant, provide advertisers and product manufacturers with access to consumers at or near the point of sale so that the advertisers and manufacturers can offer real-time, targeted promotions gleaned from the customers' profiles, transactions and behavior analytics
  • Manage loyalty programs to lower the cost of running these programs for merchants and to improve the ease of use and benefit accumulation for consumers
  • Build a subscriber-referral model for merchants to bid for customer attention
  • Provide customized payment terms or offer "matching" terms at the point of purchase

    "In this changing landscape, banks must continually evaluate their long-term competitive position to take advantage of new opportunities and mitigate threats presented by the connected consumer at point of sale," said George Tubin, senior research director, Tower Group.

For more information on the Cisco IBSG retail financial services survey, please visit

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PCI SSI Community Meeting in Orlando

A 1976 ad promoting the change of name to VISA...Image via Wikipedia
The Green Sheet 2.0 :: Newswire
PCI SSC meeting attendees help guide payments' future

The PCI Security Standards Council (PCI SSC), a global, open industry standards body providing management of the Payment Card Industry Data Security Standard (PCI DSS), PIN Entry Device (PED) Security Requirements and the Payment Application Data Security Standard (PA-DSS), today announced that more than 550 attendees from over 325 organizations met at the Council’s second annual Community Meeting, in Orlando, Florida, to provide input and analysis of the newly released 1.2 version of the PCI DSS and other payment card security standards. This represents a 71 percent increase in attendance from 2007. The highly anticipated event, held from Sept. 23-25, welcomed the Council’s participating organizations and assessment community contributors.

The Council also is pleased to announce that in addition to its rapidly growing assessment community members, there are more than 500 participating organizations from around the world that actively contribute to the standards setting process, up from approximately 240 in 2007. Participating organizations provide the backbone of feedback and support for the PCI security standards and cross a wide spectrum of industries and locations. Participating organizations are the only group in the Council that receive early versions of draft standards and documentation, provide feedback and direction on the PCI standards, and receive regular communications and opportunities to work with the Council on cardholder data security. The list of current participating organizations can be found at .

Topics discussed at the Orlando meeting included the release of the PCI DSS version 1.2, updates to the PA-DSS and PED Security Requirements, special interest group reports on wireless and payment card pre-authorization security, the introduction of a quality assurance program for the QSA community along with keynote addresses from the Department of Justice and Forrester Research. These interactive sessions gave participants key information as they continue with their PCI standards implementation.

Because of the dramatic increase in participation in the Council, this year’s community meeting in Orlando will be followed up with a second community meeting in Brussels, Belgium, October 21-23, 2008. This second meeting will enable participating organizations and the PCI assessment community to engage with the Council at an additional venue. More than 120 delegates have already registered for this additional meeting.

In addition to the more than 500 participating organizations, the Council has 147 approved scanning vendor (ASV) companies and 164 qualified security assessor (QSA) companies that help ensure continued compliance with the PCI DSS. The Council also approves payment application QSAs (PA QSAs) as part of the PA-DSS program. Together, the assessment community and participating organizations, at the community meeting and throughout the year help define and evolve the security standards to protect payment cardholder account data.

“As we meet at our community meetings it is especially important that the Council reflects the broadest spectrum of payments system players,” said Bob Russo, general manager, PCI Security Standards Council. “The tremendous and rapid growth of our participating organization program and assessment ecosystem, as well as the increased attendance at our community meetings, is a testament to the payment industry’s commitment to protecting cardholder data while ensuring that the standards we manage truly reflect global industry desires and needs.”

For More Information:

More information on the PCI Security Standards Council and becoming a participating organization please visit , or contact the PCI Security Standards Council at .

About the PCI Security Standards Council

The mission of the PCI Security Standards Council is to enhance payment account security by driving education and awareness of the PCI Data Security Standard and other standards that increase payment data security. The PCI Security Standards Council was formed by the major payment card brands American Express, Discover Financial Services, JCB International, MasterCard Worldwide and Visa Inc. to provide a transparent forum in which all stakeholders can provide input into the ongoing development, enhancement and dissemination of the PCI Data Security Standard (DSS), PIN Entry Device (PED) Security Requirements and the Payment Application Data Security Standard (PA-DSS). Merchants, banks, processors and other vendors are encouraged to join as Participating Organizations.

Source: Company press release.
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