Someday, such a thing as an alternative payment no longer may exist.
This year, several acquisitions or product changes have occurred that take payment systems designed to function as online alternatives to traditional payment methods and combined them with a company or product that handles payments in person.
The most recent example is Western Union Co.'s purchase of eBillme, the alternative-payment system developed by ModaSolutions Corp. of Rye Brook, N.Y. This follows last month's decision by Google Inc. to absorb its troubled online-payment system Checkout into Google Wallet, a mobile-payment system that functions at the point of sale (
"We are at the beginning of a roll-up of smaller alternative-payment providers," says Andy Schmidt, research director for global payments at TowerGroup in Needham, Mass. "Another way to look at this is that traditional payment providers are also realizing that they need to be more agile and need more innovative partners to survive."
Western Union, of Englewood, Colo., confirmed Dec. 12 the eBillme acquisition, which it completed in October but did not announce (Payments News reported the deal Dec. 12 after spotting the Western Union logo on eBillme's website). Western Union did not provide terms of the deal.
Chiefly, the acquisition enables Western Union to offer a broader array of products and services to customers with bank accounts.
"Western Union has been working to position itself more effectively with banks, both for remittance and bill payment support," says Beth Robertson, director of payments research at Javelin Strategy and Research. "EBillme has the bank linkage and bill payment link, and [Western Union] sees this as a logical fit."
Western Union ultimately will subsume the eBillme brand into its suite of services and eliminate the name, a company spokesperson says, unable to offer details about what would happen to eBillme's current management, which includes company founder and chief executive Marwan Forzley.
EBillme enables consumers to pay for things online using their bank's online bill-pay function. This allows consumers to send payments without sharing a credit or debit card number.
The eBillme deal will expand Western Union's product offerings and boost eBillme's scale by giving it access to Western Union's base of millions of customers globally, analysts say.
"From the bank perspective, this is an alternative payment mechanism that leverages bank infrastructure," says Rick Oglesby, senior analyst with Aite Group.
Customers with bank accounts will be able to use them to tap into Western Union's broad range of payment options via Westernunion.com, the company spokesperson says. They previously had to use a credit or debit card for the services.
"EBillme has a processing platform that lets U.S. shoppers pay for e-commerce from a bank account, and Western Union intends to apply this to improve the customer experience for those sending money transfers via Westernunion.com," she says.
EBillme works with 800 online merchants and 17,000 online bill-payment sites, Western Union says.
Already a smaller player than the likes of eBay Inc.'s PayPal, eBillme saw its market share decrease over the past year, according to data published in November by Javelin Strategy and Research. Only 2% of consumers who have used an alternative payments provider said they used eBillme in 2011, compared with 3% who said they did in 2010, Javelin says.
By contrast, use by consumers of PayPal's BillMeLater, an instant-credit system for online and mobile payments, grew to 14% from 1% over the same period, according to the research.
"Our big assumption is that PayPal was able to get BillMeLater positioned within a broader range of e-commerce platforms and, therefore, with a broader number of merchants who are mostly PayPal merchants," Robertson says.
PayPal also has a global reach of 120 countries, and its mission is to enable cheap payments worldwide, analysts say.
Western Union has nearly half a million agent locations around the world, and says it served 165 million consumers in 2009, the last year for which it has numbers. It offers services that include expedited bill payment and wire transfers.
In Western Union’s third quarter earnings call in October, Hikmet Ersek, president and chief executive of, said the company had agreements with 70 banks for its service that enables wire transfers from bank accounts.
This month, Western Union announced a partnership with Vodacom Group Ltd.'s M-Pesa, which enables person-to-person payments using mobile phones. The partnership will let M-Pesa customers wire funds abroad using Western Union's infrastructure (
M-Pesa conducts more transactions in Kenya than Western Union does globally, Schmidt says.
"Western Union has a big target on its back and it's trying to stay relevant," Schmidt says.
