A company called eCatalystOne has developed an Internet payment system that lets consumers set up prepaid accounts and debit them when they buy goods on the Web.
The Newport Beach, Calif., company, founded in August 1999, says its ePaid system is an alternative to credit card payments on the Web.
Instead of marketing its own brand, eCatalystOne is trying to team up with online portals to market the service under the portals established names. It is also working with merchant processors to offer the system as a payment option to merchants.
Consumers can buy and deposit cash into ePaid accounts at any of Western Unions 30,000 branches. To make a purchase from the prefunded account, a consumer enters a user name and PIN, and sometimes answers a confidential question at a participating merchant Web site.
The accounts have been available for two months, but the companys deals with the portals have not yet started, nor have the deals with merchant processors, so very few merchants currently accept ePaid.
ECatalystOne said that once its system gets going, the accounts will be sold in more retail locations. The company says its payment method is particularly good for teenagers who do not have access to credit cards; for foreigners who have limited access to credit cards; for people concerned about privacy; and for people new to the Internet who are reluctant to give their credit card numbers to online merchants.
The biggest opportunity is the international space, said Tom Fedro, chief operation officer. EPaid is cash on the Internet. It allows consumers to buy online without the use of credit cards or bank accounts.
The company said it will soon announce partnerships with four Internet portals: two in the United States, and one each in Europe and Asia. The portals will offer the ePaid service under their own brand as another convenience for their customers.
We partner with the folks that have a lot of brand, and we bring them a lot of value, Mr. Fedro said.
ECatalystOne is also trying to get merchants to put the ePaid acceptance mark on their Web checkout pages along with Visa, MasterCard, American Express, and Discover.
The company says it has signed agreements with 152 of the worlds top 200 electronic merchants.
We have two merchant services signed, and expect to have them integrated by the beginning of February, and each has 20,000 to 30,000 merchants in their roll, Mr. Fedro said.
ECatalystOne says merchants will be attracted to ePaid, because the company is charging lower interchange fees than the credit card companies.
According to a report from Jupiter Media Metrix, merchants are interested in accepting new, safer forms of payment that require little or no modification to their existing systems. These would include the one-time-use numbers offered by companies such as Orbiscom, Aplettix Inc., and Cyota.
But consumer acceptance of alternative payment methods, even those that rely on credit card infrastructure, is still another 12 to 18 months away, according to Jupiter.
New payment mechanisms must combine the ease of use and ubiquity of credit cards with improved control over fraud protection, said Andrew Ari Clibanoff, an analyst at Jupiter. Right now alternative payment systems are harder to use than conventional ones, he said.
ECatalystOne is sailing into a strong headwind, Mr. Clibanoff said. Two of the companies that served the teen market have already folded, and there is a whole host of alternatives in international markets, he said.