MODASolutions Joins the Incentive Parade for Online Payments

First came PayPal Inc., then Google Inc.'s Checkout service. Now MODASolutions, an Ottawa-based company that lets consumers pay e-retailers as if they were paying any other online bill, is offering incentives tied to the holiday-shopping season to promote alternative ways to pay online. But in MODASolutions' case, its SECURE-eBill service is combining PayPal's cash-rebate offer to consumers with Google Checkout's offer of free transaction processing for merchants. From Nov. 10 until Feb. 28, it will forgo processing fees, normally 1% up to 2% of the sale, for new merchants and will pay $25 cash rebates to consumers who use the service. That's more than PayPal's $10-to-$20 rebate offer, which is good until from Nov. 23 to May 15, though the San Jose, Calif.-based processor is also offering to pay shipping costs until Dec. 15 (Digital Transactions News, Nov. 6). Google last week said it will process transactions on its fledgling Checkout service for free from Nov. 8 until the end of the year. The offer applies even to merchants not using Google's AdWords service. Normally, Google charges 2% plus 20 cents per transaction, though AdWords advertisers get $10 of Checkout processing free for each $1 they spend on the pay-per-click marketing service. MODASolutions, which doesn't have the resources of Google or eBay Inc. (PayPal's parent company) behind it, hopes its gambit will raise awareness of its product. “That requires an attention-grabbing device,” says Marwan Forzley, chief executive of the company. “For us, free processing is a way for us to tell the merchant we have a great story you should look at.” At the same time, he says, online merchants are looking for ways to make customers aware of alternatives to credit and debit cards, and to encourage them to use those services. Hence, the rebates. “It's a way to tell their customers a payment option is available to them,” says Forzley. Still, he says MODASolutions' incentives are not me-too reactions to the Google and PayPal offers, pointing out that the company has run variations of similar offers from time to time with specific merchants. “We noticed PayPal and Google put together offers and were public about them, so we've decided to be more public about it,” says Forzley. Forzley refuses to say how many merchants have adopted SECURE-eBill. He says, though, that the product is starting to appeal to major retailers. Indeed, he expects to announce within the next two weeks that a major, multi-channel merchant has signed on to accept the product. “There's good progress being made with larger accounts,” he says. Earlier this year, for example, Tool King, an online purveyor of drills, saws, and other power tools, began accepting SECURE-eBill (Digital Transactions News, Jan. 27). Forzley says 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. Unlike PayPal and Google Checkout, both of which allow users to pay online merchants through existing credit card accounts, and unlike PayPal, which also allows automated clearing house debits, SECURE-eBill relies on banks' online programs. 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.