I4Commerce Broadens Its Merchant Network for Online Transactions

A transaction processor that targets high-volume online merchants is winning adherents among merchants and consumers alike for its product, which allows consumers to buy on credit without entering sensitive account data. I4Commerce Inc.'s “Bill Me Later” service, which became commercially available two years ago as an alternative to credit cards for Web transactions, saw its profile in the acquiring community rise most recently when First Data Corp. included it in its new “Encompass” platform of online payment services for merchants. With 20 Web and call-center merchants live now, and another 20 in the process of being integrated, I4Commerce projects it will have added 40 to 50 merchants by year's end. The company also expects it will increase its share of transactions, which runs from 3% to 7% with merchants accepting Bill Me Later now. “We know there's pent-up demand for this,” says Mark Lavelle, vice president of business development for the Timonium, Md.-based company, which refuses to release transaction volumes. The appeal to merchants is that a Bill Me Later transaction costs less than a credit card payment, yet still extends credit to the consumer. I4Commerce charges 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. With electronic links to credit bureaus, the company can approve a consumer in three seconds, requiring only his birthdate 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. Consumers are allowed to roll over balances at a 17.9% rate. Because I4Commerce extends what amounts to private-label credit and doesn't require entry of sensitive account information, its merchants are reporting higher average tickets on Bill Me Later transactions than on credit cards. Also, the product allows merchants to reach consumers without credit cards and set at ease customers who are wary of entering their card data online. Lavelle says systems such as Verified by Visa and MasterCard's SecureCode, which are meant to combat fraud by requiring customers to enter passwords and other secret data, usually only get in the way of consummating transactions. “Merchants are extremely frustrated that the answer (to fraud) with credit cards turns out to be a detriment,” he says. “It has been a real strain.” But Bill Me Later is not for all merchants. I4Commerce targets high-volume sites doing a minimum of $50 million annually, and is not interested in digital-content sellers or in micropayments. “We won't have the ubiquity of Visa or MasterCard, nor is that what we're designing here,” says Lavelle. Already, Hotels.com, eBags, 1-800-Flowers, and Ross-Simons are among the online retailers that have signed on. The latest deal with First Data Merchant Services, which involves First Data selling Bill Me Later as well as Verified by Visa and SecureCode in a single turnkey package (Digital Transactions News, March 3), should help increase awareness of I4Commerce's service. “Broadening the network of merchants makes (Bill Me Later) more popular,” says Lavelle. At the same time, he says, more and more Internet merchants will want to embrace alternatives to credit cards. Says he: “What we evangelize is choice.”