I4 Commerce Reports Bill Me Later Growth, Looks to Debit, Prepaid in ’06

Reporting rapid growth for its payment service and rising interest in a new marketing and finance platform it rolled out last month, I4 Commerce Inc. says it will begin next year expanding into new payment channels, with debit and stored-value ranking as distinct possibilities. The company will end the year with about 200 online merchants signed for its Bill Me Later transaction service, up from around 60 at year-end 2004, according to Mark Lavelle, vice president of business development. He says it is adding 2,000 new user accounts daily, and expects to reach the 1-million threshold by year's end. “Bill Me Later has made just tremendous traction,” says Lavelle, over the past year. Timonium, Md.-based I4 Commerce has made its Bill Me Later network, which allows online shoppers to buy products with what amounts to a form of private-label credit, part of a new suite of services it calls PayCapture. The other components include what it calls “promotional financing,” or deferred- and installment-payment programs, and so-called preferred accounts, which allows Internet merchants to run rewards programs and add a dedicated line of credit integrated into their shopping carts and usable only at their stores. Merchants that also operate physical stores can issue plastic branded with their names and with Bill Me Later. Rolled out in August, PayCapture has enlisted Ross-Simons, Overstock.com, and Newegg.com so far, with more in the pipeline, says Lavelle. Merchants that have already implemented Bill Me Later, he says, have a head start in deploying PayCapture. “[They've] done 80% of the work,” he says. He attributes the growth in Bill Me Later and the encouraging interest in PayCapture to merchants' rising awareness that how they handle payment is as crucially important as logistical or merchandising considerations. “Payment can't be left to chance any more by the retailer,” says Lavelle. “They have to think about the psychology of the consumer. Consumers are saying, 'Yes, I'm ready to buy, but how am I going to pay for it?'” Payment matters, and messaging around payment matters.” At the same time, Bill Me Later is priced under online merchants' usual payment channel, general-purpose credit cards at card-not-present rates. I4Commerce charges merchants a transaction fee of 1.5% plus 15 cents, which it estimates is anywhere from 30% to 40% less than what merchants pay for a card-not-present credit card transaction. Now, debit and prepaid products could be next. Lavelle says more payment options?possibly including stored value and a form of online debit?will likely be added in 2006, with pilots planned for early in the year. “Stored value and debit are strong possibilities,” he says. “The platform is designed to handle those.” He won't give details of how the programs might work, though they are likely arouse interest among online merchants, many of which are looking for alternatives to credit cards and the high acceptance costs they bring. I4 Commerce maintains electronic links to credit bureaus, allowing the company can approve a consumer in three seconds, requiring only his birth date and the last four digits of his Social Security number. On subsequent transactions, the customer need only click on a “Bill Me Later” logo displayed on the merchant's site. Transactions flow through the same processing links the merchant uses for credit cards, and I4Commerce renders statements to consumers and collects payment.