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Praxell By Alexis Gutzman April 23, 2001 Praxell is a pre-paid, private-label payment system with integrated promotions and loyalty programs. Merchants and companies that are interested in offering pre-paid cards, such as gift cards, might want to consider using Praxell''s solution. Praxell is a ready-for-prime-time solution. It''s already in use in many stores in Israel, including Tower Records, Office Depot, and Blockbuster. Caisse d''Epargne, the fifth largest bank in France, is implementing Praxell for its 350 business customers. By recommending their own private-labeled cards, "ECU Pocket", to their 26 million consumer depositors, they''re able to drive business to their business customers, provide depositors with increased convenience, and keep the deposits in their own system, whether it''s with the businesses or the consumers. How It Works Merchants sell their own private-labeled pre-paid cards (e.g. Merchant Gift, Teen Cash) on their Web sites, by phone, and in their stores. Each card is associated with a randomly generated 16-digit account number, like a credit card number. Customers can spend the card value either in person or electronically. If the card does not have enough value for the purchase, the system supports split payments with credit cards, merchant loyalty points, or alternative currencies such as Flooz. Once a customer has purchased a card, he can add money to his card, which makes this payment system attractive to stores that want to attract teenage budgets (managed by parents). All payment processing takes place on Praxell''s servers. The merchant never sees the payment information, receiving only an authorization code from Praxell once the payment is authorized. Since the merchants already have the money -- having sold the cards themselves -- there is no delay in getting paid. Merchants install an API on their own servers, which triggers the secure payment that appears when a customer indicates he wants to pay with his pre-paid card. Fees, Costs, Etc. Praxell charges merchants an implementation fee of $20,000 and a per-transaction or per-card fee on a sliding scale. For micropayments they support percentage fees or very small flat fees. They''re currently supporting a merchant that sells newspapers for 1 euro ($0.85 U.S.). The cost structure makes Praxell''s services attractive only for larger merchants. Overall Praxell is a good, simple, but rather expensive solution for companies that want to sell pre-paid gift or cash cards for use in online and in-store payments. Pros: Available in any currency. In production in Europe and Israel. Merchant doesnt store any payment information of customers. Completely private and anonymous for customers who purchase the cards with cash. Money is always within the merchant''s system, so there are no delays in receiving payments. Merchants handle fraud and non-repudiation on their own. Cons: There is no network of merchants and customers from which to benefit, so merchants must do all the marketing for their cards themselves. Alexis D. Gutzman is an E-commerce Technology Author and Consultant and author of The HTML 4 Bible, FrontPage 2000 Answers!, and ColdFusion 4 for Dummies. Her newest book, The E-commerce Arsenal: 12 Technologies You Need to Prevail in the Digital Arena is now available. She can be reached at agutzman@internet.com