ModaSolutions is a payments company based here in Ottawa, Ontario. They work with banks and online merchants to enable customers to buy through their online banks. The company was founded by entrepreneur Marwan Forzley who was previously director of business development at Nokia. I was invited to meet with the startup company and talk to them about their ambitions.
A different way to pay
A typical e-commerce experiece requires you to fill out your name, cedit card number, expiry date, billing address, 3-digit security code, and sometimes your 'verified by visa' password. It's more convenient if you've already stored all this information in your PayPal or Google payments account. Then all you need is a username and password.
But buying through ModaSolutions' Secure eBill is different. At checkout you only give your name and email. The company then automatically figures out your bank details and sends you an electronic bill that you can pay through online banking.
Secure eBill's value proposition
Secure eBill is at the epicentre of a triangle -- sitting between merchants, banks, and customers.
For the merchant, Secure eBill has two important advantages. First, it's cheaper for a merchant to accept payments with ModaSolutions. The payment processing fees are lower because money is transferred via direct debit and not through the more expensive credit card network. As an example Secure eBill will cost the merchant around 1% of the product price with ModaSolutions versus $0.25 + 2.5% with Google Payments. Second, the merchants can target those internet users who have yet to buy online because of security fears. According to the CEO of ModaSolutions, this market segment is more likely to do ecommerce if the payment solution does not require them to submit any sensitive information.
For the banks, ModaSolutions offers them a chance to enhance their existing relationship with their customers. Many current payment solutions abstract the bank or credit card from the shopping experience. How? Well when you give PayPal your credit card information, and then again your banking information for the sake of verifying your account, you're making it more convenient for yourself to purchase online. Because from now on you have stored your financial information in a vault, and all you need to buy is email and pass. But credit card companies and banks aren't fond of products that create a layer between them and their customers. Secure eBill on the other hand acts as a complementor to the banks. It uses their direct debit mechanism while maintaining the relationship the bank's relationship with its customers.
For the end consumer, Secure eBill gives a semblance of a more secure transaction due to the fact that the only information required at checkout is a name and email, and everthing else happens through the bank. A recent study by Jupiter Research reveals that 48 million North Americans now pay bills online and this number is projected to reach 92 million by 2009. But for most people, the sense of security that comes from paying through one's bank is countered by the inconvenience of it. On average it takes about two days to process a payment through the e-billing solution currently offered by banks. This makes me wonder if e-billing might be a solution more suited to pay for utility bills and university tuition fees rather than for items purchased online.
Conclusion: safety vs. convenience
Like any solution out there Secure eBill has its pros and con. The fact that every purhcase has to be paid through the online bank is a double edged sword that gives the company its main strength and weakness. The battle between PayPal and CitiBank's c2it payment service has has shown that the success of a payment method relies in large part on choosing an acceptable balance between convenience and security -- a point in the graph that makes for a great user experience while at the same time keeping risk at check. And although the established payment companies might own the sweet spot that appeals to the mainstream, other lesser known companies might appeal to certain subsegments of consumers. ModaSuolutions belongs to the latter. I would keep it on my radar.
