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  Visa, MasterCard and...Bill Me Later?
Increasing number of payment methods available for online shoppers
By Suzanne Choney
MSNBC contributor
updated 8:01 p.m. ET, Thurs., Dec. 13, 2007
As online holiday shoppers rush toward the finish line, more of them may be choosingalternative ways to pay for goods than with credit cards.Rising credit card rates, consumers facing maxed-out cards and security and convenienceare some of the reasons for the shift. “There are an increasing number of payment alternatives,” said Kurt Peters, editor of InternetRetailer.com, citing services such as eBillme, PaidByCash and Bill Me Later.In addition, “Merchants don’t want to be locked into just MasterCard, Visa, AmericanExpress and Discover cards, and consumers have shown they like the alternatives,” Peters said.Credit cards now account for 60 percent of all online transactions, debit cards another 26percent and alternative payment methods 14 percent, said Bruce Cundiff, senior analystfor Javelin Strategy & Research.By 2012, an estimated 30 percent of online transactions “will be handled by alternativesources of payment,” he said. “The increase in alternative transactions as a percentage of all transaction volume willaffect credit cards, which decrease … from 60 percent in 2007 to 44 percent in 2012,” Javelin said in a September report, “Online Payments Forecast.” Debit card usage will remain steady, the company said.
 
Marwan Forzley, president and CEO of eBillme, said his company’s service “appeals to atype of consumer who does not have a credit card, or whose credit card is maxed out andis looking for other ways to pay.” With eBillme, consumers pay for online purchases directly through their online bankaccounts, much in the same way they pay electricity and phone bills online.Merchants are charged a fee of between 1 and 1.5 percent for each transaction,compared to between 2 and 4 percent charged by credit card giants such as MasterCardand Visa.With 84 million online banking users in the United States, Forzley said, online banking “isbecoming a mainstream service,” and by using a service such as eBillme, “you’re usingthe money you have in your online account to pay a merchant.” Among the companies that now use eBillme are Crutchfield, TigerDirect, andLuggagePoint.com.Ebillme acts as an intermediary in the buying process. When a shopper chooses eBillmeat checkout, their order is confirmed with a bill sent to their e-mail address. It’s up to theshopper to pay the bill through their online checking account. “The merchant ships when you pay,” Forzley said.PaidByCash, operated by Retail Expansion Network of Oakland, Calif., is geared toconsumers who may not want to use credit cards online, or who may not have bankaccounts.Customers can load up to $350 on a PaidByCash card account for use online, purchasingthe cards at stores such as Kmart, Rite-Aid, Safeway and Food Lion.Payment is made through Western Union. The card itself is activated online, and can beused at sites where debit MasterCards are accepted.Bill Me Later, another service, bills customers for their online purchases with paymentterms similar to those of a credit card.
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