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Though questions remain about the potential for widescale consumer use of contactless-payment stickers affixed to mobile phones to conduct purchases at the point of sale, a start-up transaction processor offering an alternative payments network is centering part of its business model on the technology. Bling Nation Ltd. last month concluded a beta test of a prepaid contactless sticker, and the results were encouraging, the Palo Alto, Calif.-based company says. Bling enlisted 32 employees from social-networking Web site Facebook to test the stickers at participating merchants in downtown Palo Alto, where Facebook also is based. Bling surveyed the group after the 10-day test, and virtually all the participants found the activation process and their first transactions easy to conduct. Users activated the application by calling a phone number and entering the identification number printed on the bottom of the sticker. Nearly all the users (96%) said they would continue to use the tag if given the chance. Bling does have an agreement with a community bank to offer to merchant clients, Meyer Malka, Bling co-CEO, tells ATM&Debit News, a CardLine sister publication. An official announcement of an acquiring partner is scheduled in the next month. "It's an ideal community bank that has a high market share," Malka says. The banks would issue the stickers. In November, Bling told CardLine sister publication American Banker its payment network will help community banks earn more revenue on local debit purchases. The banks would act as the acquirer and encourage local merchants to use the network; Bling would operate the network and process payments. Some industry analysts question whether the concept has legs, but Dennis Moroney, research director of bankcards for Needham, Mass.-based TowerGroup, an independent research firm owned by MasterCard Advisors, believes the card networks and large transaction processors should take note of Bling's product. Bling is showing community banks, credit unions and merchants a way to operate outside the traditional payment and transaction networks, he says. Under its model, Bling expects to charge merchants 1.5% of the transaction amount for each purchase. Bling would keep 0.3%, leaving 0.95%. The remaining 0.25% is profit for the acquiring bank. Malka previously said Bling's fees compare favorably with established debit networks. Of a typical 3% merchant fee, 0.09% goes to the network, 0.92% to the processor, and about 0.25 % covers banks' cost. That leaves 0.23% as profit for banks, he said. Merchants should be attracted to the cheaper fees because of the economy, Moroney says.
