A table talk with Brian Crozier, UseMyBank: "The world needs more choices to pay online!"

For years, the dominance of credit cards in online transactions remained unchallenged. However, changing market trends have created new opportunities for alternative (non-credit card) payment methods and practices, which have evolved considerably and have made rapid headway among consumers and merchants. Technology Strategies International has already predicted that in Canada, the growth in alternative online payments will be approximately double the growth in online credit card payments over the next five years.

Online banking is one of these alternative payment methods, enabling consumers to pay online from their debit cards. The Paypers had the chance to talk with Brian Crozier, the VP of Business Development at UseMyBank, about the online baking-based payment method this company provides and the market it operates in.

The Paypers: In the past, online consumers were predominantly limited to using their credit cards for online transactions. Nowadays, this is no longer the case as more payment choices are made available to online consumers around the world and these alternative (i.e. non-credit card) payment mechanisms are taking market share away from credit cards. Are these alternative online payment methods among the high-growth segments on the Canadian payments market or do Canadians still face limitations when it comes to paying online?

Brian Crozier: The credit card industry was at the forefront of e commerce in the mid nineties and online merchants were running transactions as card not present (MOTO) Mail Order Telephone Orders. The online businesses learned that with at least 30-40% of consumers without credit cards they had to find other payment methods for all those people that did not have or want to use their credit card online. Our experience has shown that when you add more forms of payments you increase your market share but not at the expense of credit cards. Consumers want the same payment choices online that they have at retail. With online banking this is now possible.

Canadian online businesses and consumers have faced limitations when it comes to paying online. The banks have created an environment where almost all online sales are by credit card. Till this day you can not by an airline ticket or a vacation online in Canada without a major credit card.

TP: You got started in 1996 processing credit cards for the online gaming industry, then in 2002, you co-founded UseMyBank Services, a Canadian company which offers online debit payment services. Why this focus shift from credit to debit?

BC: The online gaming industry was the fastest growing e commerce business for credit cards and helped to launch PayPal and Neteller. My business partner was the largest payment processor for online gaming and I was always looking to find new ways to process more transactions. I met my current business partner and CEO, Joseph Iuso in 2000. Joseph has been in self service banking for 20 years and had the idea of offering online merchants the ability to accept payments from their customers with online banking. After the Dot Com melt down in 2000 we got back together and processed our first transaction in early 2003. Now we are in ten countries working with some of the largest payment processors. If you are an online merchant you should try and offer your customers all the payment methods that you are comfortable with. Credit card volume continues to grow but at a slower rate than debit. Debit is the fastest growing payment method at retail and now online.

TP: In my opinion, your service seems to have a big disadvantage: when entering their bank card number and the same password that they use when signing onto their online banking account, buyers could expose themselves to possible losses in case money are stolen via unauthorised transactions. What systems do you have in place to prevent online fraud?

BC: UseMyBank has developed a proprietary anti fraud system that adds over 30 rules to the second factor authentication at the banks. With this combination we are able to achieve a 99.999999% good funds model. This second factor authentication makes it highly unlikely that a breached account can be used more than once.

TP: Customers can use UseMyBank not only for daily purchases, but also for funding online casino accounts by using their existing bank accounts. Which sector is more profitable for your company? Who is your target audience?

BC: Most major payment service providers process transactions for all forms of e commerce. Our business model is to enter a vertical market with the leader and have the rest follow in. We used this successful strategy with the online gaming business and now work across all industries. We focus on the largest online procesors, merchants and billers who want to automate payments for their customers.

TP: What challenges has UseMyBank had to face since the company`s inception in 2002?

BC: Some banks viewed us as a threat to their online credit card business and others were glad to have their customers generate millions of transactions through their online bank.

TP: As you have already announced, plans are currently under way to roll out the UseMyBank service in additional countries and industries (airline and travel). The company is also looking to expand its services into the mobile payments arena. Could you provide us with any details regarding these future plans?

BC: We are marketing to the airlines and major online travel sites about accepting payments from their customers with online banking as well as major telcos and mobile carriers.

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