Growth of the Cashless Web
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The growth in e-commerce over the past five years has been paralleled by the growing interest in Web currency schemes. A new Australian start-up has developed a system whereby consumers can purchase online without a credit card.
Online rewards schemes number in the hundreds. Typically, incentives such as savings or discounts at online stores encourage visitors to perform simple tasks such as accepting banner ads or allowing email marketing in their inboxes.
The Web currency trend, arguably, has failed to make a significant impact in the online world. The most well-know incentive-based rewards program, beenz, recently shut down a number of offices, including Australia, and is reportedly looking for a buyer.
Speaking to Link-Up, Debbie Levitt, president of Web site developer AsWas.com, said Web currencies are still struggling "because they don't interface with anything but their own partners. It's hard to get excited about So-and-So's GoldCoins or whatever they are when you can only spend them in seven online stores. Even if you could spend them in 150 online stores, that doesn't mean those are stores in which you want to shop."
Few companies have managed to avoid the use of credit cards in some form for purchases online.
A Sydney based company, Technocash, has developed a payment system without the use of a credit card. The system is a mixture of bricks, buying over the counter, and clicks, spending on the net.
Launched last year, Technocash allows users to buy vouchers through Australia Post nationwide and directly online through Internet banking. Anybody can deposit funds in advance and use Technocash to spend it online. The company is expanding national distribution through other physical retail outlets and consumers can purchase products up to AUD$2,000 (US$1,017).
"Among the many customers of Technocash are people who want to have control over their money by not using credit cards on the Internet with potential security risks or credit limit issues, says Co-Founder Paul Monsted. "Technocash is a secure and private system for anybody wanting to make payments over the Internet without the risk of credit card fraud or identity theft."
He believes the service is also popular with merchants who risk losing profits through chargebacks on cards whenever customers dispute their bills.
The service is accepted by a number of merchants from Sanity.com and Roses Only to Gold Today. The company recently signed a deal with SMS portal and mobile phone accessories company, BlueSkyFrog.
Raymond Pakalns, director and co-founder of Technocash, explains there has been some merchant scepticism about the company. "Usually they look for the catch, but it's really simple; we charge a merchant fee (like Visa) only."P>
Pakalns believes the concept can be rolled out on a global scale and has plans for a NASDAQ listing. He sees "Technocash as a global business and its best served as we expand internationally by joining in one of the largest capital markets."
He points to the example of Ezyimage.com.au as a company which has managed to undergo an IPO in a tough investment climate.
Pakalns is quick to dispel comparisons to beenz, suggesting they're "a closed system that ask merchants to buy promotion "cash" and then the merchants give it away just in the hope that they create a sticky site."
"Whilst we already offer cash rewards we are about the primary business of transaction processing by secure pre-paid methods with universal access for all. If you have an ABN you can do B2B transaction in a paperless environment. Our model is similar to successful debit card systems except oriented towards the net and with online scalability and rewards add-ons."
The service has received strong interest overseas, especially in South-East Asian countries such as Indonesia, Malaysia, Israel, Italy and Singapore.
"Finally, to put it simply we want to provide a cash like payment medium for Internet transactions that will enable the widest range of C2B, C2C and B2B opportunities for consumers and merchants to participate in the digital age. We see ourselves as complimentary to other payment services in the very large global shopping centre of the twenty-first century."