HomeATM Featured in The GreenSheet

Homing in on e-commerce

HomeATM Payments creates innovative solutions for processing secure debit and credit card transactions on the Web. You may wonder why this is newsworthy. After all, many companies process transactions online. HomeATM has a twist: It processes all transactions as card present.

Yes, you read that correctly.

With HomeATM, consumers make e-commerce purchases using their ATM or credit cards, and payments are processed as PIN debit transactions. HomeATM Chief Operating Officer Mitchell Cobrin said the company's mission is to "expand current payment options on the Web by enabling consumers to use their debit/bank ATM cards, a growing payment option of choice."

The company was founded in 2002 by a group of payment industry experts and Internet entrepreneurs. It recently switched headquarters from Chicago to Montreal, and its 25 employees are spread among offices in Chicago, Montreal and Hong Kong.

While HomeATM is just four years old, its founders have more than 40 years of combined experience introducing e-commerce solutions. Among them, they have more than 30 patents.

After three years of research and development and spending more than $3 million, HomeATM owns one patent and has six more pending. They all pertain to innovations in payment processing and encryption.

"HomeATM owns the worldwide patent for PIN debit or credit transacted through a Web browser," Cobrin said. "We are capable of enabling e-consumers to use their PIN debit/bank ATM card from the comforts of their home with participating merchants. We will defend our patent and pursue infringers.

The HomeATM process requires only a computer, a HomeATM ScanPad and an ATM/debit card. No registration or enrollment is needed. To deploy, a consumer simply connects a ScanPad to a computer, swipes an ATM card and enters a PIN. That's it.

"Our bank-level secure technology operates via a USB peripheral and offers the consumer dual authentication," Cobrin said. The plug-and-play devices are supplied to merchants at cost. Merchants then give the devices to their customers, free of charge.

Merchants determine which clients receive devices. For example, a merchant may decide any consumer who spends a certain amount of money within a given time deserves the device.

Cobrin realizes some consumers may resist changing their online purchasing habits. For them, merchants can offer incentives. For instance, an airline may offer three miles for every dollar spent with the device, rather than the standard one mile for every dollar spent using other payment methods.

HomeATM does not seek to profit from equipment sales. Rather, it wants to get the ScanPad into the hands of end users. The situation is analogous to cell phone service or satellite television subscriptions. In these models, the hardware is typically provided at no cost to the consumer. The provider earns profits on the use of the service.

The company is also beta testing PIN-entry software that has the same capabilities as the ScanPad. But Cobrin noted its release is not imminent. HomeATM continues to collaborate on development with processors and banks.

Speedy, safe and profitable

HomeATM's target merchants have large, recurring client bases. Cobrin said it is advantageous for these merchants to convert consumers from card not present credit transactions to PIN debit transactions because there is less risk.

"We guarantee 100% payment in real time with no chargebacks or reserves," he said. The company is able to make this guarantee because PIN debit transactions take place in real time. "When the transaction occurs, the funds are set aside at the issuing bank. Those funds settle at 3:00 a.m. Eastern Time that night. No chargebacks," he added.

Cobrin also pointed out that PIN debit transactions are more cost effective: HomeATM can often save merchants 100 to 150 basis points.

"Debit is a cheaper transaction on the whole," he said. "The rates across the board in the debit world are less. With debit we have a point of sale rate that allows us to pass the savings on to the merchant."

Merchants also benefit from the system's flexibility. They can use any processor because the HomeATM software works with all existing debit and credit networks.

Another attractive feature of HomeATM transactions is their security. Transaction information is not entered into merchant databases. It doesn't even go to merchants; it goes directly to consumers' banks. Therefore, the risk of consumer data remaining on merchant servers is eliminated.

Additionally, all customer data is encrypted in the ScanPad's PIN pad before it even reaches the computer. The card data is never visible, eliminating the risk of theft due to phishing, key logging and other criminal tactics.

Consumers can even use this technology to send funds person to person by simply swiping their bankcards. The intended recipients can retrieve the money from any ATM worldwide, or use it for POS transactions at any merchant who accepts debit cards.

When asked if PayPal is a competitor, Cobrin said, "It can be a friend or foe. HomeATM can be an instrument to load a PayPal wallet, or it can be a direct competitor at the checkout. We can do everything PayPal can and a whole lot more. And our rates are much more advantageous."

Good news all around

HomeATM is good news for consumers who want to use their ATM cards online. It is good news for merchants who want access to that market. And it is good news for ISOs and merchant level salespeople (MLSs) because HomeATM is interested in forming relationships with the ISO and MLS community.

"We are a dexterous and nimble company eager to add ISOs, MLSs and merchants, and we are open-minded to strategic relationships and partnerships," Cobrin said. The company uses hybrid buy rates and offers agents commissions and residuals.

HomeATM already has several established relationships with agents around the world. "We are a company that offers a lot of support and collaboration to our ISO/MLS agents throughout the sales, integration and customer care processes," he said. "We view these organizations as partners; our success relies on their success."

The company is interested in working with ISOs that are sector-based and have expertise and contacts in industries such as e-commerce, travel and hospitality.

"We want to align ourselves with companies who have established relationships with appropriate e-merchants who fit our markets," Cobrin said. "Costco.com, walmart.com, dell.com and so on - those are the people we envision doing business with."

Tapping new markets

ISOs and MLSs choosing to add HomeATM to their merchant offerings will be able to help their customers access consumers who have previously been out of reach.

E-commerce security is an ongoing and growing concern. And, debit is the largest growing transaction method. Both of these factors contribute to an environment ripe for an effective PIN debit e-commerce solution.

"There is a huge market of people who don't use credit, and there is a huge part of the market who are petrified to put their data into a Web browser," Cobrin said.

Not only can HomeATM help ISOs and merchants reach the debit community, it can help them reach the credit community and other profit areas.

"Debit can be a conduit to grow sales," Cobrin said. "It is generating sales growth potential. Even micro payments are an opportunity. Because of our cost system, we can make it affordable."

HomeATM can also process credit cards: The HomeATM device is chip-and-PIN-ready. And when a credit card is swiped using HomeATM's device, track 2 data is captured.

"We can still do credit better than anyone can do remotely," Cobrin said. "From a chargeback, repudiation and fraud consideration, capturing track 2 data is nonexistent from home" with other providers.

HomeATM's focus is to make payments easy for all parties. It can work with any industry in any region. The company's process is compatible with all banks and acquirers.

"Since we are technology-centric and bank-agnostic, we are flexible to integrate and work with an unlimited amount of processors and banks," Cobrin said. "We are happy to work with our clients' processors and acquirers."

Of particular interest to merchants, HomeATM custom designs programs to accommodate each industry's challenges. This honors HomeATM's commitment to flexibility and ease of use and is another selling point for ISOs and MLSs.

"Our solution can be applied to every industry including person-to-person money transfers, travel, MLM, taxation, parking meters, airlines, car rentals, hotels, tour operators and so forth," Cobrin said. "When it comes to PIN debit over the Internet, there is only one place to go, and that's with our worldwide patented technology."

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.