Press

Cards International 26 February 2009

Divya Guha

Alternative payments : online payments www.vrlfinancialnews.com

The proliferating alternative payments markets recently welcomed two new offerings entering the fray of online card-free debit-based solutions, a market where the level of competition is already high and dominated by the likes of PayPal and Google Checkout.
California-based start-up Noca and Miami based Mazooma are addressing the now-commonplace aversion of consumers and merchantsto using credit cards for transactions.
A new take on things Noca, founded by former Visa employees,offers enticing prices, almost eliminating merchant
transaction fees by charging only 0.25 percent for payments routed via the automated clearing house (ACH) network.
Noca has launched a beta version of its payments system based on Secure Check, a debit system which processes in real time whereby merchants can immediately dispatch goods after payment and allow the consumer to print a receipt. It takes an hour to set up and does not require merchants to enroll. It also allows the receipt of money directly from customers’ bank accounts with the payment processor taking away the liabilities associated with credit card transactions, which normally lie with merchants, but it does not offer any payment guarantee as such. However, Noca provides end-to-end encryption and stores all data at an off-site data centre that is certified Payment Card Industry (PCI) compliant.
The California-based company, which was founded in 2007, is funded by angel and group investors, including former PayPal executives.
“Noca amounts to an economic stimulus plan for online businesses,” said Pankaj Gupta, founder and CEO of Noca, who previously worked at Visa in roles including chief network architect and director of network security. “Exorbitant payment processing fees have been a pain for merchants offering goods that carry low margins or sell at low price points. Secure Check lets merchants increase their profit margins and free up cash.
It also gives consumers the choice to pay for purchases in the same way they already pay their bills.”
Gupta says that in future they may also consider looking at Visa and rival MasterCard as potential partners, not as competitors, in business. “We are a payment option that is an alternative to Visa and MasterCard. Bill payment networks are generally a way to present, store and pay bills. When paying they offer the payer a choice of Visa, MasterCard, American Express, Discover and so on. We are an additional choice.”

As merchants continue to grumble over the cost of accepting credit card payments, momentum is gathering in the online payments space with services being launched that aim to offer merchants a cost-efficient alternative. Divya Guha speaks to two new players hoping to make their mark in a competitive industry