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www.ecommerce-guide.com/news/trends/article.php/1492191
By Beth Cox October 31, 2002 "Buy now, pay later." It's the American way -- the mantra that has sold everything from cars (how else could most of us afford them) to higher education, and has given rise to the entire credit card industry. It has also -- until now -- fueled almost all e-commerce sales. But a new wrinkle on the old theme has arrived, called "Bill Me Later." And it may be just the ticket for helping to increase online sales during this period of financial blahs that the economy just can't seem to shake off. A company called I4 Commerce, a developer of alternative payment solutions for merchants, just signed Aliso Viejo, Calif.-based Internet retailer Buy.com as one of the first major online retailers to adopt its proprietary payment option. With Bill Me Later, qualified buyers "are instantly authorized for the amount of their purchase," the company says. I4 Commerce then sends the customer a bill that can be paid in full at no extra charge, or financed over time by making minimum monthly payments. The payment mechanism is also aimed at those consumers without credit cards or those who choose for security reasons not to put their card numbers at risk online. And that is a big benefit for online merchants. The Bill Me Later function is aimed directly at reducing the rate of abandonment for online shopping carts. I4 seems to be up and coming; the company earlier this month signed a deal in which its Bill Me Later technology will be integrated into CyberSource's payment processing service. "Merchants gain access to Bill Me Later through their existing relationship with CyberSource, making the benefits of this new payment method easily accessible through our standard application programming interface," said Steve Klebe, vice president of strategic alliances at CyberSource. CyberSource has already begun marketing the payment option to some of its current clients, including companies like Home Depot and Overstock.com. "From what I've seen, this is one of the few alternative payment types that has its act together," Klebe has been quoted as saying. Bill Me Later effectively eliminates the need for a credit card. A monthly bill aggregates all purchases made at the Bill Me Later member merchants, allowing the consumer to finance the purchase or pay the balance in full at no charge. One of the benefits for merchants, according to Buy.com's president, Robert Price, is lower cost per transaction. And, "Offering Bill Me Later opens the door to thousands of customers who may have yet to purchase from Buy.com," he said. I4 Commerce's payment method is specifically designed for "card-not-present" merchants, including phone orders, mail orders and e-commerce transactions. Merchants receive authorizations, settlements and reporting in a manner similar to credit card transactions, I4 says, and the company claims to charge merchants less than credit card companies. Consumers, instead of being asked for a credit card number, are instead asked to enter their billing address, date of birth and sometimes the last four digits of their Social Security number. Much like a credit card company, I4 will bill customers on a monthly basis and will charge interest on outstanding balances, just like a credit card company. Timonium, Md.-based I4, formerly called GoPin and backed by credit card processing giants Paymentech and First Data Corp., says it holds the patent pending rights to the proprietary technology and business processes behind the service. The company, of course, must foot the bill for authenticating consumers who use the option. Mark Lavelle, vice president of business development for I4, told me that "a lot of what we do regarding methods of verification and credit evaluation is proprietary. Other parts are quite common to the industry practices, for instance, we do work with the national credit bureaus." Clearly not all consumers who want to use this service are going to be approved. The company says it is also working closely with merchants and using their customer data to help determine credit risks. You can check out the demo here. |
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