Early Success at TigerDirect Could Boost SECURE-eBill’s Prospects

It's early yet, but both daily transactions and average order value have been rising for payments accepted by TigerDirect Inc.'s Web site through online payment system SECURE-eBill, says Marwan Forzley, the chief executive of Ottawa-based MODASolutions, which markets the system to online merchants. TigerDirect, a Miami-based merchant that sells electronics gear through stores as well as on the Web, began processing payments through SECURE-eBill about a month ago, Forzley says. MODASolutions announced on Thursday it had signed the retailer, the largest Internet merchant to adopt SECURE-eBill since the product went commercial in May 2005. “TigerDirect is a validation of the interest of larger merchants in this payment option,” Forzley says. Forzley refuses to reveal specifics about transactions at TigerDirect so far and qualifies the information by calling it “early data.” But he says the statistics have been “quite healthy even without any promotion.” Forzley says. As part of Thursday's announcement, TigerDirect said it will give away USB memory sticks to all first-time buyers who use SECURE-eBill. SECURE-eBill is accounting for anywhere between 2% and 6% of sales at accepting merchants so far. The average order, he says, is running higher than credit card sales in many cases, though he will not say how many merchants are now accepting SECURE-eBill. Apparently, TigerDirect was not swayed by a MODASolutions promotion, introduced in November, in which the processor offers to forgo processing fees for SECURE-eBill and pay $25 cash rebates to consumers who use the service (Digital Transactions News, Nov. 13, 2006). That offer expires Feb. 28. Forzley says TigerDirect had already signed on before the offer was announced. Acceptance fees for the product are normally 1% up to 2% of the sale. Without disclosing results so far, Forzley says the promotion has boosted both “inquiries and sales.” Having signed up TigerDirect, which also accepts PayPal along with major cards, Forzley points to a trend in which larger online merchants are adopting SECURE-eBill, and he now expects more top-tier online merchants to consider the product for Web payments. Early last year, for example, Tool King LLC, an online purveyor of drills, saws, and other power tools, began accepting SECURE-eBill. Tool King, which also accepts alternative payment products PayPal and Bill Me Later, is No. 302 in a ranking of online merchants by Chicago-based Internet Retailer magazine. TigerDirect comes in 26th. “There's a general belief that over time all these alternative payments will see increased [transaction] share,” he says. But he argues SECURE-eBill has an edge because it helps attract new customers while cutting transaction costs, including the costs of fraud. “We're lowering the cost of customer acquisition, and closing the transaction cheaper [than with cards],” Forzley argues. “There are no chargebacks, no [non-sufficient funds losses].” Unlike other alternative online payment methods like those of PayPal and Google Checkout, SECURE-eBill relies on online-banking programs to authenticate consumers and let them pay online merchants as if they were paying a bill. When the customer is ready to pay, he clicks on the SECURE-eBill icon, reviews his invoice on-screen, and enters only his name and e-mail address. Within minutes, the merchant sends the bill to the consumer, who logs onto to his e-banking site and pays it as he would any other bill, setting up the merchant as a payee. MODASolutions, which is linked to MasterCard International's RPPS backbone network, receives notice of payment and notifies the merchant. Within two days, the merchant receives guaranteed funds and can ship merchandise according to its own policy. MODASolutions' software also integrates to the merchant's back-end system, updating its shipping and accounting servers. With returns, customers deal directly with the merchant, though SECURE-eBill can process refunds.