A recently completed round of funding will help eWise Systems USA Inc. support its online Secure Vault Payments and develop a mobile version of the payment method, according to the company’s top executive.
“The reason for the round is very simple,” CEO Alex Grinberg said in a June 6 telephone interview. Besides developing “a world-class international support organization,” eWise wants to expand into “logical extensions of Secure Vault Payments, including mobile payments.”
When consumers click on a Secure Vault Payments button on a retailer’s website, a switch takes them to their own bank’s Web page to complete the transaction over the automated clearinghouse network. After they make the payment on their bank’s site, the system takes them back to the merchant’s site for confirmation. The process does not expose the consumer’s personal information to the retailer.
With the mobile version, a participating bank embeds an application in a smartphone that conducts the transaction in much the same way, Grinberg said. EWise demonstrated the mobile capability at a recent trade show and intends to test it late this year, the company said.
The mobile approach uses a quick-response code, a half-inch square pixilated with smaller squares, that users typically scan to go to a website. EWise has incorporated payments information into the code, such as the merchant code, product identification and payment amount, Grinberg said.
Participating banks would give customers an application to download that has the payment function, he said. Authentication requires a six-digit code.
“It’s not live, but we’re working with a number of banks on taking it live,” Grinberg said of the mobile application. It should be in place “toward the end of this year,” he added, noting transactions should take place in an average of 10 to 12 seconds.
The offline version also could work with bills sent by mail, including utility bills, Grinberg said.
The merchant never touches the personal information, thus reducing risk and eliminating the need to comply with the Payment Card Industry data security standards. The cost to merchants could undercut card interchange fees because the Secure Vault Payments transactions take place on the automated clearinghouse network (
Consumer banks and acquiring banks can realize an “incremental revenue stream” with the product by assigning an additional function to capabilities already in place in their “online front end,” said Grinberg.
Consumers do not have to register or fund any special accounts because the system draws funds from their regular bank accounts, Grinberg said. Eliminating those steps makes the product more convenient for consumers and relieves banks of the cost of paying for the steps, he said.
ISOs and agents constitute a “cornerstone” of the strategy, Grinberg said. “ISOs play a fundamental role in the growth of Secure Vault Payments, “ he said. “They have a relationships with merchants and billers, [and] they have a demonstrable track record of bringing payments solutions to those billers.”
The company made headlines with Secure Vault Payments a month ago when Merrick Bank Corp. signed on to offer the payment method to merchants through its ISO network (
The number of potential customers for the online version runs in the tens of millions because U.S. Bank, the nation’s fifth largest, and some smaller banks are offering the product, eWise said (
To keep the number of potential customers growing, Denver-based eWise has raised $14 million in a new round of funding, part from a new investor, Wellington Partners, and part from previous investors, Balderton Capital, TTV Capital and Patagorang, according to a June 7 press release.
Alexandre Gonthier, a Wellington partner with a payments background, is joining the eWise board, the press release said.
“The fact that those [previous] investors followed up in this round is very, very important validation and approval of the progress we’re making, hitting and surpassing milestones,” Grinberg said. Balderton has been an investor for four years and TTV Capital for two years, he said.
The product creates value by absolving retailers of risk and providing a secure service to consumers that they can use on their phone, says Gil B. Luria, an analyst at Los Angeles-based Wedbush Securities Inc.
“The challenge for an upstart is that consumers expect ubiquitous acceptance,” Luria said. “If you can only work through one bank or just several banks and a limited number of merchants, that’s not going to be good enough.”
Visa Inc. and MasterCard Worldwide have the advantage of near universal acceptance and were created for that purpose, Luria said, adding that American Express Co. and Discover Financial Services also have achieved broad acceptance
But the near-ubiquity of the major card brands does not deny a role for alternative payments, Grinberg said, citing as examples the success of PayPal, prepaid cards and ACH checks.
Consumers want choice that includes more than the major cards because more than 50% of Americans have no credit cards, have overdrawn their card accounts or fear using cards online, he said.
EWise is seeking acceptance among utilities, government agencies, colleges and universities, and online retailers, Grinberg said. He would not say how many entities the company hopes to sign up to accept Secure Vault Payments, but he did project that by the end of year entities conducting a billion transactions annually would be accepting the payment mode.
Eventually, the company’s leaders can imagine capturing 12% to 20% of those billion transactions, Grinberg said, noting a system that works the same way now accounts for 70% of online transactions in the Netherlands.
