Even as small banks are being encouraged to set up their merchant customers on the Web, some big banks that pioneered such services are reportedly pulling back. Among them are Fleet Boston Corp. and First Union Corp., Charlotte, NC, according to an executive with a technology vendor who preferred not to be named, but whose organization competes with banks that attempt to enable merchants to sell online.
Sour grapes or something more? The implicated banks say the source's comments are baseless, but there are signs that banks are not readily becoming merchants' ecommerce providers of choice.
Fleet, which previously had announced its intention to be the single source for merchant services-from Web site design and hosting to catalog and payment processing provision-now largely limits itself to the payment end. The bank's virtual store provider, Empressa, dissolved late last year. Fleet won't say how many Web merchant customers it has now, as compared with the 120 it had last July.
Other institutions also have stumbled on the road to small business ecommerce. For example, Jennifer Moore, an executive with First Union who For example, played a key role in its merchant e-business offering, left the bank this spring.
About a month ago, ABN Amro Corp. told BTN that it had yet to find any takers for a bank Web site development offering, something that merchants previously appeared to want. "I don't know what it was," says Brian Moran, product manager of commercial card services. "We had customers lining up at the door, we come out with a product and now I don't know where they are." The bank began offering Internet credit card transaction acquiring last December and has about a dozen businesses using that service, SurePay. However, at press time no customers had come forward for a Web site development program, eCreator, that the bank introduced
Ironically, Empressa "dissolved," as Radner termed it, a month after the promised start date for a joint marketing campaign with the American Bankers Association. Marco Emrich, president and chief executive of Cambridge, MA-based Empressa Inc.-who last August told this reporter that his firm was to start a telemarketing campaign to ABA members-did not return calls placed to his home.
The ABA says no such deal had been struck, though Emrich did speak at a couple of ABA conferences last year. A spokesperson for the trade association says, "It couldn't be further from the truth to say that banks are getting out of ecommerce-enabling their merchant customers."
Fleet Boston strenuously denies reports (from both the source cited earlier and a past customer) that it is no longer promoting its merchant ecommerce program. A bank spokesperson noted that storefronts
Greg Radner, marketing manager for business payment solutions, says Fleet is now "less interested in (Web) site building and more interested in commerce-enabling merchants' existing sites."
The bank still offers Web design and hosting services that have lately attracted several, albeit small, merchant customers, Radner adds. These services are provided by intermediaries, including units of Empressa that have been sold or spun off. Fleet now recommends "a handful" of designers. Formerly, the bank worked through more than a dozen designers, branding the sites under the Fleet name.
"Our original turnkey product was in March 1998. Since then, the market has evolved and we've evolved with it by unbundling that product offering," Radner says. Up until late last year, Fleet merchants had to use Cybercash for their Internet payments gateway. Now the banks supports multiple gateways, which, Radner says, makes it easier for Fleet to support merchants that come to the bank with their shopping Web sites already in place.
The executive most involved in First Union Corp.'s merchant offering, SecureSales, recently left, making BTN wonder if this related to the source's claim that the bank's program had "tanked." First Union's Moore, the assistant vice president who ran SecureSales, left about a month before Michael Horn, the bank's chief information officer. Horn left to join a Deerfield, IL-based ecommerce consulting company, The Revere Group, last month. Representatives of Charlotte, NC-based First Union said Horn had no involvement in SecureSales. A spokesperson adds, "I'm not sure that their departure had anything to do with this (the SecureSales program)." Moore was replaced internally, she says.
First Union Vice President Lou Anne Alexander refuses to say where Moore had gone, adding that she had been "a one-person show," whereas now "four-and-a-half" dedicated employees have replaced her. (Moore said last July that First Union had assigned to sell and support SecureSales staff.)
Alexander points to the increase in resources as a sign that SecureSales is thriving. She declines to say how many merchant customers First Union has for the service or how much its customer base has grown in the past year.
First Union resells a discounted and heavily customized version of virtual store software from a leading provider, Open Market Inc., integrating the Burlington, MA, vendor's software with the requisite merchant systems for accounting, fulfillment and other functions. Originally, First Union ran SecureSales in-house, but switched almost two years ago to a service bureau specializing in Open Market's software, iCOMS Inc. of Nashua, NH. Although First Union never offered merchant site hosting, it is considering doing so as part of its expansion of what Alexander terms "a basket of services for small and midsize businesses." (By First Union's definition, that's those with less than $10 million in annual revenues, and between $10 million and $100 million in annual revenues, respectively.) The report that banks are pulling back from such service offerings is "not what we're finding at all," Alexander says. Countering a suggestion that banks will only attract small businesses, Alexander adds that the size of First Union's average SecureSales customer is increasing.
One bank that's had more success in business ecommerce is Wells Fargo & Co. The San Francisco bank created one site for small merchants last September and another for larger merchants last spring. Wells says that it now accepts online credit card payments from 9,000 merchant sites, up from 3,000 last August.
However, Steve Klebe, vice president of payment alliances at CyberSource Inc., a San Jose, CA, Internet payment gateway and provider of various ecommerce services to merchants, says that banks have largely abandoned the notion of working directly with merchants in favor of reselling and referring arrangements struck between the bank and an ecommerce specialist.
"A few years ago, banks bought software from Open Market (and other vendors) to set up merchant malls, and they all cratered," he claims, while refusing to name names. "Smaller, more nimble companies came along to set up merchants. The banks have to compete vigorously against those companies focused on being just merchant enablement companies."