UseMyBank: Finally, an Internet Debit Payment Solution - Issue 5 - October 31, 2004

Frontier Times, Issue 5, Octoberb 31, 2004

UseMyBank: Finally, an Internet Debit Payment Solution

Canadians are the world’s top debit card users, making 76.4 transactions per person in 2002 compared to 54.0 in the United States according to the Canadian Bankers Association and a 2003 survey by the Bank for International Settlements (BIS). While in 1990, checks made up of two-thirds of cash-transactions for Canadians, just 7 years later, debit accounted for 1/3 of payments while check transactions decreased to 31%. Why this increase in debit for payments? The reason was the unveiling, in 1990, of Interact Direct Payment (IDP), Canada’s national debit service, by Interac Association, an unincorporated, not-forprofit association, founded in 1984 by five Canadian financial institutions. As stated on its website, Interac Association is the Canadian organization responsible for the development and operation of a national network of two shared electronic financial services: Shared Cash Dispensing at automated banking machines and Interac Direct Payment. While today, Interac’s membership includes numerous banks and other financial institutions; any company incorporated in Canada is eligible to join.

In the brick-and-mortar world, debit payments in Canada are all under the auspices of Interac Direct Payment (IDP). The merchant or cardholder swipes his or her debit card at the POS terminal for customer’s approval. Once the customer has chosen the account from which funds are to be withdrawn, and entered his or her PIN, the transaction is sent, using the Interac Inter-Member Network, to the cardholder’s financial institution for approval. IDP transactions are processed immediately, and the funds are typically debited from the customer’s account right away. Similarly, the customer’s funds are normally transferred to the merchant on the same, or within one, business day.

But, what about online debit? Today, the only company providing the technology to enable consumers to use their debit cards to make online purchases is UseMyBank Services, Inc, of Toronto, Ontario. When asked about UseMyBank, George Gorsline, Director of New Opportunities Interac had “No comment.“ Neither Sara Feldman, VP of Communications & Marketing of Interac, nor Barry Campbell, Marketing Manager of Interac, returned e-mails or calls for comment on this story.

UseMyBank calls itself “the world’s first payment service to use the existing Online Banking Payment Systems.“ The service allows buyers to use their existing “online banking bill payment service” with their supported banks to make payments in real-time to registered sellers or merchants. Sellers can sign up to accept instant online payments in minutes. Buyers do not have to sign up with UseMyBank to make payments to sellers. For the buyers, the service is free. For the merchants, UseMyBank claims to offer the best transaction fees available on the Internet today: a discount rate of between 1.5% and 3.5% is applied to the purchase with a $1.50 minimum transaction fee. The average Seller rate is 2.5%. Merchants who apply to become Sellers with UseMyBank pay a one time, one-dollar electronic signature fee to activate a merchant account. The banks verify the money is in the account before the transaction goes through. In contrast, eCheques (i.e. preauthorized debits) are not verified, and can be denied if the funds are not available. Since the transaction is in real-time, chargebacks and holdbacks are prevented. As Brian Crozier, UseMyBank’s VP of Business Development, confirmed, the company has helped Internet merchant increase sales by 10%-30%, and has built a portfolio of almost 1000 Internet merchants with continued growth. UseMyBank’s success thus far comes as no surprise judging from the absence of an alternative in the market.

UseMyBank was founded in July 2002 by Joseph Iuso, a Canadian entrepreneur with over 18 years experience in various management and consultant positions in the areas of Project Management, ecommerce, ATMs, POS, and Credit & Debit transaction processing. Iuso contacted the banks and Interac for financing but was not given the deals he wanted, so he financed the company himself.

This is how UseMyBank’s service operates: the providers and sources of the consumers’ online accounts are referred to as “Transaction Providers.“ The account information that is collected from these Transaction Providers is used on the consumer’s behalf (i.e. account information, Bill payee, etc). In order to access the account information from these Transaction Providers, UseMyBank requests the consumer’s online Login Information, which is the user’s online-banking password and card number, providing online access to the appropriate account information and billing facilities. The account access from these Transaction providers is then used to process bill payment or email money transfer transactions from the selected account. At no time is the account information logged or stored on a server. The actual transaction processing is done by the banks automatically to UseMyBank’s biller, GPAY. GPAY also does the settlement between the banks and the merchants. Thus, UseMyBank is a service provider, and not a payment provider. GPAY is just one biller, and as Iuso stated, UseMyBank has “the ability, and rightfully has attempted to sell to the over 4400 billers in Canada, including, Sears, Rogers, Bell, Telus, Fido, and on and on.“ Moreover, he claims that “the fact that the banks hold a monopoly on these institutions in other ways is most likely the reason they have not come on board.“ As he explains, in 2003, both CIBC and TD notified UseMyBank’s Biller GPAY that they would no longer be offering a biller account to UseMyBank, citing worries about security and protection. This caused UseMyBank to leverage CertaPay, which offers e-mail money transfers. Now consumers, who were paying zero to 50 cents for a debit, depending on their bank’s service plan, would be forced to pay an extra flat fee of $1.50. This move initially hurt UseMyBank because of the $1.50 applied to every transaction from CIBC and TD. However, Iuso assured us that "the volume levels have returned for both banks, and it is no longer a concern."

In a recent Toronto Sun / CANOE online article entitled “Online debit hits firewall” (May 28, 2004,) columnist Linda Leatherdale wrote about the relationship between UseMyBank and Canadian banks. Indeed, Iuso confirmed with us that in May 2003, he took his complaint to Ottawa’s Competition Bureau. The Competition Bureau, when contacted about this story, was unable to disclose any information about UseMyBank’s file, as all Competition Bureau files are confidential.

To extrapolate on the Competition Bureau issue, Brian Crozier drew our attention to an article in Digital Transactions dated September 1, 2004 entitled “Canadian Banks Will Launch PIN Debit for the Web Next Spring” announcing that Canada’s five major banks will roll out the exact same service that UseMyBank provides. Crozier pointed out that the Bank’s planned new service, iDebit, has been in the works since 1999, without coming to fruition yet. Acxsys Corp., an affiliate of Interac, will be administering iDebit, as the Digital Transactions (DT) article reports. Crozier notes, however, that the name of “PIN Debit” used in the article’s title is a misnomer as PIN Debit is used in the brick-and-mortar word. The DT article itself corroborates this fact, reporting that, with this promised future service, “the consumer enters his password for online-banking access along with his account number […] no need to enter a PIN.” Moreover, from a perusal of the article, iDebit seems to be mirroring the service UseMyBank is offering now with the exception that buyers would be directed to their online banking site during the transaction. Bob Grant, Senior Vice President of Electronic Banking at Scotiabank, told us that the iDebit product would be available either in late Spring or early Summer and that Interac would serve as the information conduit or communication channel through which debit transactions would be processed. In the DT article, Mr. Grant also noted that “online merchants are clamoring” for this service. Crozier agrees as “this is what he has seen and UseMyBank has been delivering since 2002.”

When asked if UseMyBank holds the patent to the technology it provides, Iuso says there is “no point”: similar technologies have been patented as early as 1984 but no one has the license to implement this technology since banks do not give this license. So, how has Iuso been able to implement this technology? He says that he has “insider knowledge.“ The technology security systems of the banks are so complex and vary from bank to bank that, as Iuso says: “you have to know how banks work to start up a company such as” UseMyBank. According to an independent undisclosed source, UseMyBank technology involves screen scraping. Chris Ball in his January 22, 2003 article “Screen scraping with WWW::Mechanize” (http://www.perl.com/pub/a/2003/01/22/mechanize.html) writes that “screen scraping is the process of emulating an interaction with a Web site – not just downloading pages, but filling out forms, navigating around the site, and dealing with the HTML received as a result.“ Most of the similar payment solutions to UseMyBank have focused on using Industry Standards (OFX, XML, JPOS, etc), or by implementing a proprietary connection to the financial institution using interface standards (ISO 8583), or simply an online form for credit card, debit card, or any other existing online payment service. All these solutions require direct contact with technical and business resources within the financial institution. UseMyBank says that it is leveraging the existing online systems functions and capabilities within the clients’ own financial institution in a real-time fashion. These transactions are done from the clients’ own Chequing, Savings, or Credit Card account. Crozier stresses that the “genius” behind UseMyBank’s technology is Iuso. Iuso makes it possible for UseMyBank to ensure that the consumer’s bank authenticates the consumer’s transaction without the consumer’s card number and online password-information being stored, without exception in a model that is powerful and seems to be unique.

When asked about Iuso, an undisclosed independent source said Joseph Iuso is the “real thing,” adding that UseMyBank “drove” the rule Draft X of the CPA, the Canadian Payments Association. What is this rule? Robert Dowdall, the CPA’s Director of Communications & Education, pointed us to the Online Payment Requirements Consultation Paper whose comment period concluded on August 6, 2004. The Draft Rule X “Exchange for The Purpose of Clearing and Settlement of Electronic On-Line Payments” will be approved by 2005, according to Dowdall. As well, when asked about debit transactions over the Internet, the Canadian Banker’s Association (CBA)’s Maura Drew-Lytle, Senior Manager, Media Relations and Public and Community Affairs lead us in the direction of the CPA. As stated in the “Online Payment Requirements Consultations Paper” prepared by the H Rules Review Working Group for the CPA Board of Directors on May 27, 2004, the CPA has developed policy framework identifying criteria that online payment options must fulfill to be eligible for clearing and settlement through the CPA’s Automated Clearing Settlement System (ACSS). For the purpose of the framework, online payments are considered payments initiated over the Internet or other open communications (the term open communications network refers to a communication infrastructure, technology, or system that accommodates the processing and transmission of electronic data in a manner that can be accessed by anybody) networks that result in funds being transferred from a consumers’ account held at a financial institution to an account of another party (e.g. a merchant.). One of the key requirements is that: “The consumer’s financial institution is responsible for authenticating the consumer and obtaining his/her authorization for each online payment. The authorization for the payment must evidence not only the consumer’s assent to the transaction and his/her authority to issue a payment, but also the identity of the legitimate account holder.“ This is the model that UseMyBank has developed: the consumer’s financial institution is responsible for authenticating and authorizing the consumer.

As in the model used by the CPA, UseMyBank uses a credit push model: in the debit-pull scenario, the consumer provides all of the necessary info and authorization that allows the merchant to go directly to the consumer’s financial institution and make a request for the funds. For example, a consumer may authorize a utility company to withdraw funds directly from his/her account that is owed at the end of each month (e.g., preauthorized debits). Alternatively, in the credit-push scenario, the consumer directly instructs his/her financial institution to send money from his/her account to the account of the designated recipient (e.g. merchant) For example, through online or telephone banking, a consumer may instruct his/her financial institution to pay a monthly utility bill. Dowdall added that he does not know when a product that matches the rule will be offered to Canadians. When asked if he had heard about UseMyBank, he replied in the affirmative but could not offer any other information.

Iuso says that he welcomes competition, adding that he would be happy to have Interac develop a product similar to UseMyBank’s, as he would be able to streamline his product to interface online with Interac’s. The company is currently in ongoing negotiations and testing with billers in Europe and the U.S. and plans to offer its services to merchants and consumers there by November 2004. UseMyBank wants to become a worldwide phenomenon connecting consumers and merchants on the Internet from every part of the world. Iuso, with noted pride, told us that an ex-CEO of Europay remarked to him that UseMyBank’s objectives could be mapped to the 3D Secure Model for credit card transactions, a key component to the Visa Authenticated Payment Program with the primary benefit of the reduction in disputed transactions and the resultant exception handling expenses and losses. Whatever UseMyBank’s objectives are, the fact remains that UseMyBank’s service appears to be the only one of its kind today not only in Canada but also in the world.

Anny Vexler, Managing Editor, vexler@frontiertimes.ca

Note from the Editor

Debit payment in Canada is ready to graduate. The question is who will take us to the next level of on-line access to debit payments. Canadian banks have been talking about various solutions for some time. Some entrepreneurs have also entered the space in Canada. In this issue we take a look at one such entrepreneur, UseMyBank.com. Studying on-line debit from the perspective of a Canadian entrepreneur, we discovered that the business has more than the usual set of barriers to entry. For example, Canadian banks seem to be encouraging their clients to not use anything but their own solution, which has yet to be deployed. This topic is perfect to expose the growing pains of the emerging payments business in Canada.

The FT announces that it has a new Managing Editor. I would like to take this opportunity to thank Anny Vexler, outgoing Managing Editor, for adding a lot of depth to our writing and substantially increasing our subscriber base. We wish Anny the very best. I would also like to give a warm welcome to our new Managing Editor, Angela R. Read who brings a wealth of research experience to the position. Angela has worked for a number of years as a researcher in film and television. We are excited to have Angela as part of the FT Team.

Finally, stay tuned for advertising from some of the biggest names in the business that we expect in coming issues.

Adam N. Atlas

Editor in Chief

atlas@frontiertimes.ca

CORRECTION

In The Frontier Times’ Issue 4, the news item “TD Outsource to Hewlett-Packard its New ATM Network” incorrectly stated that HP will lead the project to “supply TD with POS terminals.” As Robert Hayhow, Product Manager of Merchant Services at TD Canada Trust, clarified, while HP will replace 2,400 TD ATM machines but will not supply TD with POS terminals.

News

Datawest Solutions Inc. Announces Plans to be Acquired by Open Solutions Inc.

Vancouver, BC, August 13- Datawest Solutions Inc., a leading provider of innovative banking and payment technology solutions in Canada announced that it has entered into a definitive acquisition agreement under which a Canadian subsidiary of Open Solutions Inc., a provider of integrated data processing technologies for banks and credit unions, will acquire all of the shares of the Company. Under the terms of the agreement, Open Solutions will offer total cash consideration of CDN $1.23 per common share for 29,824,126 common shares and CDN $2.60 per preferred share for 5,000,000 preferred shares.

This acquisition, which has been approved by Datawest’s board of directors, is subject to the approval of Datawest’s shareholders, the Toronto Stock Exchange and the Supreme Court of British Columbia, as well as customary closing conditions. The board of directors of the Company believes that the proposed transaction is in the best interests of the Company and its shareholders and recommends that shareholders vote in favor of the proposed transaction. The Company currently anticipates holding the necessary shareholders’ meeting in October 2004 and closing the transaction in November 2004. Open Solutions will operate Datawest through a wholly-owned Canadian subsidiary, and Datawest will continue to be located and operate its Banking Solutions data centre in Vancouver and its Payment Solutions data centre in Oakville (outside of Toronto). Open Solutions hopes to leverage each company’s strengths and experience to develop additional product offerings, new technologies and applications.

Nishe Media Licenses Smart Chip Technologies’ Loyalty Solution

Las Vegas & Toronto, August 17- Smart Chip Technologies, whose turnkey customer retention solution, including Loyalty, Pre-Paid Stored Value, and Gift Cards, was co-developed with Canada’s Airos Group and IBM, announced that Nishe Media, a multinational media and advertising firm specializing in vertical market communications, has signed an agreement to license Smart Chip Technologies’ patentprotected, next-generation loyalty program management solution. In a press release, Phil Watkins President and CEO, Nishe Merchant Solutions stated: “We are extremely excited about the launch of our new loyalty program. Since this is a multi-million dollar investment over the next few years, we focused on choosing a vendor that could grow with us into the future. SCTN’s scalable, end-to-end software solution is at the heart of driving this important rewards program.”

TNS Smart Network now processing transactions

for 7,200 Canadian ATMs

Toronto, August 31- TNS Smart Network Inc., the largest privately owned Canadian transaction processor, has reached a milestone of more than 7,200 ATMs in Canada. According to a news release, this growth represents a 149% increase in ATMs in the past three years. TNS Smart Network has seen a 79% increase in transaction volume since 2001, and continues to add new features such as customizable alert notifications as well as wireless transactions/ATM security monitoring to its software. It also began offering processing in the United States through a subsidiary, SPN Processing Network, earlier this year.

Fake-CU Newspaper Scam Returns, But No One Victimized

Credit Union Journal, August 9-The state Division of Banking and Financial Institutions issued a cease-and-desist order last week against four individuals, believed to be Canadian, after they sought to place an ad in the Great Falls Tribune for credit unions purporting to operate out of a Kaispell, Montana address. The newspaper was apparently made aware of the potential scam because of a letter that NCUA (National Credit Union Administration) and the American Newspaper Association sent to more than 7,000 publishers and advertising department heads warning them about such ads.

The scam is similar to one that spread through more than 20 states over 18 months in which two Toronto-area residents used bogus credit union names and sometimes the same names as legitimate credit unions, to solicit hundreds of thousands of dollars from unsuspecting American victims. The two suspects, brothers Leslie and Kevin Card, were convicted of fraud charges in Ontario.

Keycorp in wireless payment system for Canadian taxis

August 13- Keycorp Canada Inc, a secure electronic transaction solutions provider and subsidiary of Keycorp Limited, announced an agreement with Digital Dispatch Systems Inc. to introduce an invehicle solution for accepting debit card payments in Canadian taxis. The two companies have developed the solution, called SmartPay, to allow Canadian taxi companies to accept real-time payments using Interac®, Canada’s national debit card service, which uses a taxi’s existing radio system to securely transmit wireless data to authorize card payments. Until now, Canada’s only in-vehicle wireless POS solutions were based on cellular networks and required the merchant to pay airtime connection fees. Paul DeRosse, Managing Director of Keycorp Canada Inc., said: “Canadians have been pushing taxi companies to introduce mobile debit payments for some time […].”

Keycorp worked with Digital Dispatch Systems to integrate the Keycorp K23 Payment terminals into the taxi radio dispatch terminal. Digital Dispatch Systems chose Keycorp K23 terminals because of their backlit graphics display, faster processing speed, superior memory and the capability to add new applications in the future. The K23 terminals also have enhanced security features as well as an award-winning ergonomic PIN Pad design. BlueBird Cabs Ltd, based in Canada, has already signed a contract with Digital Dispatch Systems to purchase the SmartPay system for its fleet of taxi cabs.

Canada Post Unit EPO Inc. Buys E-Bill Service

Toronto, July 8- The Canada Post launched epost, the world’s first electronic post office, announced that EPO Inc. has acquired the BCE Emergis online bill delivery service, webdoxs. BCE Emergis is a leading North American eBusiness company. Louise Picot, Communications Manager at EPO, said that webdoxs was epost’s main competitor. The total purchase price for the webdoxs assets is $14.5 million.

The Canada Post – epost is a service available through various Internet portals and Canadian bank Websites, that lets consumers receive and pay bills, tax statements, and other obligations by e-mail. Sixty-five major billers use the service. EPO will combine epost’s e-billing service with webdoxs’ business-to-consumer services to provide a single Electronic Bill Presentment and Payment (EBPP) service that will be available to the 10 million Canadians who bank online. The two services will continue to operate separately until the new synthesized system is introduced in approximately six months. The webdoxs buy will allow EPO to deliver 7 out of 10 critical bills to millions of Canadian consumers from almost a hundred companies, including utilities, municipalities, national retailers, and most major financial institutions. The new service will be available through the Websites of BMO, CIBC, Credit Union Central of British Columbia, Desjardins, Laurentian Bank of Canada, National Bank of Canada, RBC, Scotia Bank, and TD Canada Trust, as well as through the Canadian version of Microsoft Corp.’s MSN portal, Yahoo Inc., and Intuit Inc.’s QuickTax and Quicken personal financial management software.

TD Bank Financial Group to become majority shareholder of Banknorth Group, Inc.

Toronto, August 26- TD Bank Financial Group and Banknorth Group, Inc. announced that they have signed a definitive agreement for TDBFG to acquire 51% of the outstanding shares of Banknorth for approximately US$3.8 billion (approximately CDN$5 billion) in cash and TD common shares. This acquisition will provide TD with the majority interest in a growth company that has a proven track record of making strategic acquisitions. Banknorth, a New England-based company recognized by Forbes magazine as the best managed bank in America, offers personal and commercial banking, insurance, investment planning and wealth management services. The Toronto-Dominion Bank and its subsidiaries are collectively known as TD Bank Financial Group. In Canada and around the world, TD Bank Financial Group serves more than 13 million customers in three key businesses: personal and commercial banking including TD Canada Trust; wealth management including the global operations of TD Waterhouse; and wholesale banking, including TD Securities, operating in a number of locations in key financial centers around the globe. The deal could perhaps position TD as a competitor to the bank of Montréal that owns Harris Bank of Chicago, the back end for Moneris Solutions, USA.

Bank Merger Rules Update

Ottawa and Toronto, September 10- In a Globe and Mail article dated September 10 entitled “Bank merger: CIBC says it’s not interested,” Sinclair Stewart and Steven Chase report that Ottawa was scheduled to publish new guidelines on bank mergers by the end of this month, but Finance Minister Ralph Goodale stated that he was delaying the much-anticipated report for a second time because he was preoccupied with a coming meeting on the future of health care funding. Furthermore, Robert Waite, a spokesman for CIBC, said that while the industry would certainly benefit from the improved clarity on merger rules, the further delay doesn’t have much impact on the bank. CIBC and TD Bank attempted to merge in 1998, shortly after RBC and BMO unveiled a surprise merger proposal, but both pairings were turned down by former finance minister Paul Martin, now Canada’s Prime Minister. Finance officials are refusing to set a new due date for the rules update paper and are being even more cautious on the topic of so-called “cross-pillar” mergers between banks and insurers, which are currently prohibited.

ECHO, XPresschex and Nova Change Counsel in Ongoing Litigation with Canada’s LML Patent Corp. after LML Patent Corp. Files Patent Infringement Suit

Vancouver, September 1- LML Patent Corp., a wholly-owned subsidiary of LML Payment Systems Inc., has agreed, and the Court has approved a second extension time for ECHO, Xpresschex and Nova to respond to LML Patent Corp.’s patent infringement complaint because each of the defendants recently changed lead counsel. LML Patent Corp. filed suit on July 14 in the U.S. District Court for the District of Delaware against Telecheck Services Inc., Electronic Clearing House Inc., Xpresschex Inc., and Nova Information Systems Inc. who provide equipment, systems and services that convert paper checks presented at the POS into electronic transactions. In the suit, LML alleges that these four companies infringe U.S. Patent Nos. 5,484,988; 6,164,528 and 6,283,366. LML is seeking damages, injunctive and other relief for the alleged willful infringement of these patents. In a company press release, Patrick H. Gaines, CEO and President of LML Patent Corp. and LML Payment Systems Inc., said that LML, during the fiscal year ending March 31, 2004, awarded a non-exclusive license to Verus Financial Management Inc, one of LML’s competitors. Gaines went on the state that LML “will not allow Telecheck and ECHO and its wholly-owned subsidiary Xpresschex, and Nova to use our intellectual property without a proper license.”

Maitre’D POS terminal by Posera at top on POS Scoreboard 2004

Montreal, July 2004- According to Hospitality Technology magazine, (July/August 2004), based in New Jersey, the POS Scoreboard placed Maitre’D by Posera – a Montreal-based software-solution development company for the hospitality industry – in the top performers category. The POS Scoreboard gave Maitre’D the highest overall rating in User Satisfaction, Overall Performance, Return on Investment, Total Cost of Ownership, Ease of Integration and Quality of Support and Service in the category of POS North American vendors with more than 20,000 POS terminals installed.

Retention Management Inc. Licenses Smart Chip Technologies’ Product Suite

Las Vegas & Toronto, September 13- Smart Chip Technologies announced that Toronto-based Retention Management Inc. (RGM), a loyalty, branding, and customer relationship management (CRM) consulting firm, has contracted to rebrand and sublicense SCTN’s Loyalty, Pre-Paid Stored Value, and Gift Card solution to their clients throughout North America. Under the agreement, RMG will begin to host the Loyalty Central(TM) back-end clearing operation for their clients later this year.

Grand & Toy Rolls Out Triversity’s Transactionware GM POS Solution to 70+ Stores in Canada

Toronto, July 20- Triversity Inc., an international provider of customer-centric retail solutions, announced that Grand & Toy, a leading Canadian office products dealer, has implemented Triversity’s Transactionware GM POS software throughout their enterprise. The rollout, which took only three months, followed the completion of a successful pilot project earlier this year.

Atlantic Lottery Offers Lottery Products on Website PlaySphere

Moncton, NB, August 4- After more than 5 years of research and development, the Atlantic Lottery Corporation (ALC) is offer existing lottery products to Atlantic Canadian adults through a secure and controlled environment on the corporation’s website called PlaySphere. Customers can fund their account in two ways. One way is with WebCash, which is a voucher that can be purchased from any ALC retailer that sells LOTTO 6/49. With WebCash, their account is funded as soon as its special 12-digit code is entered into their PlaySphere account. The second way for customers to fund their account is to electronically transfer funds from a bank account which takes 24 to 48 hours.

Hudson’s Bay Company joins Rewards Network

Chicago, August 12- The credit-card based loyalty and rewards program Rewards Network, headquartered in Chicago, has partnered with Canadian department store retailer Hudson’s Bay Company to set up the Hbc Rewards Dining & Hotels program. Members earn 100 Hbc Rewards bonus points for every CDN$1 spent on food and drinks (including tax and tips) at any participating restaurant, as well as earning points at participating hotels. For every room-rate CDN$1 spent, members earn 50 HBC Rewards points (or 100 points at selected ‘special hotels’). As Rewards Network president and CEO George Wiedemann explained: “This partnership follows the expansion of our US program into Canada.”

Rewards Network Enters Canadian Marketplace with Dining Rewards Program

Chicago, September 13- Rewards Network Inc., a leading provider of credit card-based loyalty and rewards programs, has entered into an arrangement with RBC Royal Bank to provide RBC Royal Bank Visa cardholders the opportunity to earn additional rewards points when dining at restaurants throughout Canada and the United States. With plans to add non-dining merchants throughout Canada, Rewards Network currently includes more than 10,400 restaurants in Canada and the United States. Under the arrangement, once registered, RBC Rewards Visa cardholders in Canada will automatically earn one additional point for every dollar spent when they dine at participating restaurants and pay using their RBC Rewards Visa card. These points are earned in addition to the Rewards points cardholders already collect for these purchases, and for most cardholders, that means doubling their points.

Linens’n Things and GE Consumer Finance enhance payment options for Canadian shoppers

Clifton, NJ, July 6- Linens Linens’n Things, one of the leading, national large format retailers of home textiles, housewares and home accessories, and GE Consumer Finance, a unit of General Electric Company, a leading provider of credit services to consumers, retailers and auto dealers in 39 countries around the world, announced the launch of the first private-label credit card program for the Canadian Linens’n Things Stores this month. Linens’n Things expects to open approximately 50 new stores in the United States and Canada in 2004, further broadening its presence as a leading retailer of home furnishings. During the first quarter of 2004, the company opened 21 new stores, increasing its total square footage to 15.8 million. The new agreement covers Linens’n Things’ private label consumer credit business in Canada. Under the agreement, GE Consumer Finance will provide a full range of services to Linens’n Things including marketing, risk management, customer service, collections and payment processing. Linens’n Things Canada accounts will be serviced by GE Consumer Finance’s Canadian operation with offices in Edmonton and Toronto. Approved Linens ’n Things cardholders in Canada will enjoy a number benefits including: 10% off their first purchase at any Linens ‘n Things store; special offers and discounts; no annual fee; and the chance to earn rewards for every $1 spent and a $10 reward certificate for every $250 spent.

ETAC Founding Convention Postponed

Montreal, September 12- ETAC – The Electronic Transactions Association of Canada’s founding convention of October 21, 2004 has been postponed until mid 2005. To receive registration information please contact: info@electran.ca or telephone: (514)-282-8463.

Features

EBPP Needs to Face Reality: Commentary

By Bill Loewen – Chairman TelPay, Inc.

The acceptance of Electronic Bill Presentment and Payment has, as has been stated repeatedly, been disappointing. The reason, in my opinion, is that its proponents have advocated solutions that have, understandably, served their own interests first.

The banks thought they might tie their bill payment customers, and thus their account holders, more tightly to themselves by creating a more direct link between the bank, the customer, and the biller. Canada Post foresaw a loss of revenue from mailing paper bills as the transition to electronic billing took place.

The objective of both parties was to satisfy the anticipated need of their customers to be able to access all their bills from one location. This was the right objective, just the wrong means. Wrong because it required each party to sign up all billers, an unlikely prospect. Furthermore, billers objected to the high initial and ongoing costs. While the costs proposed by the proponents were attractive compared to regular mail, billers felt they could gain the benefit without the cost by operating their own presentment service. This ignored the customer's desire to be able to see all their bills at one location. The basic problem has been that the middle man, the service provider and the payment systems, failed to satisfy the needs of the main participants, the biller who wanted low cost or the customer who wanted convenience.

All of this has involved big players; banks, the post office and major billers such as utility companies. Meanwhile, an interesting side show was taking place. Very small billers, those using accounting systems such as Accpac and QuickBooks, found these systems could email bills. Voila! The little guy had, at virtually no initial cost or ongoing cost, the very thing the big billers wanted.

For the Biller, emailing bills to a customer designated email address satisfies the biller’s objective. Nothing could cost less than that. It is relatively easy to maintain the customer’s email address. Off the shelf emailing routines are available. A little modification to the print file routine and you are in business. There are no passwords to issue and maintain. The customer’s email program can satisfy payment history requirements.

For the customer, there is only one likely place to find all their bills; at an email address designated for that purpose. It may be an individual’s regular email address. Businesses will likely designate a particular address for the purpose.

To complete the circle, bill payment service providers need to adapt their systems so that they allow their customers to view their emails as they pay their bills. They will then be able to conveniently pay all bills, paper and those emailed to them, from any source without having to print them beforehand. Copies of eBills can be stored with their payment history.

An enhancement to the process is to include with the emailed bill, HTML code that includes the customer account number, the amount of the bill, and any other information required. That information can be imported into the bill payment system and then be passed back to the biller; eliminating any possibility of incorrect application of the payment. In effect it emulates the paper bill procedure of requesting the return of a tear-off portion of the bill with the cheque. Such a process has been patented by TelPay and is now in use by one major biller.

The email approach provides the prospect of a paperless billing and payment system. With it the promise of EBPP can become a reality.

Bill Loewen FCA, CM is founder of Comcheq and a pioneer in the field of Electronic Payments. He is currently Chairman of TelPay Inc. in Winnipeg.

Note: The views expressed in this column are those of its author only, and

do not necessarily represent the views of the FT

Frontier Directory

Entities active in the electronic transactions business in Canada. A free service of The Frontier Times.

For your free listing, visit www.frontiertimes.ca

Airos Group Card, POS terminal, Cash register, gateway, host software development. 905-842-3276 www.airosgroup.com	ETAC Electronic Transactions Association of Canada. 514-282-8463 www.electran.ca	Internet merchant account and payment services provider. 877-374-9444 www.psigate.com
B2 Processing Solutions Inc. Software solutions for payment transaction industry. 416-730-9827 www.b2ps.com	E-xact Transactions IP-based payment processing, integrated and stand alone solutions. 604-691-1670 www.e-xact.com	Smart Chip Technologies Loyalty program management solutions for POS systems, cards, electronic devices. 702-837-3594 www.sctn.com
Beanstream Internet Commerce Inc. Payment and authentication services provider. 250-472-2326 www.beanstream.com	Global Payment Systems of Canada, Ltd. Bank card processor. 416-445-7151 www.gps.ca	Soltrus Inc. Provides online payment processing solutions for Canadian merchants. 877-291-3111 www.soltrus.com
Caledon Card Services Internet and integrated credit/debit card processing with Enhanced data. 905-702-9909 Ext. 103 www.caledoncard.com	Ingenico Canada Ltd. Secure transaction terminal software, network and gateway services. 416-245-6700 www.ingenico-ca.com	Telpay Incorporated Internet bill payment service for major utilities, governments, businesses, banks. 800-665-0302 www.telpay.ca
Collective Point of Sale Solutions Ltd. Enabling ISOs to sell debit, credit, gift, loyalty and prepaid. 800-219-7119 www.collectivepos.com	InternetSecure Inc. Merchant Account and Payment Service provider specializing in Internet Commerce. 800-297-9482 www.internetsecure.com	Transaction Network Services Inc. Managed data communication solutions for the transaction processing industry. 866-295-4658 www.tnsi.com
Datacap Systems, Inc. Integrated payment solutions for cash registers and POS devices. 757-496-6478 www.dcap.com	Keycorp Canada Inc. Keycopr POS products and software solutions. 905-265-9196 www.keycorp.net	TRM Corporation Global consumer services company providing convenience banking and photocopying solutions. 800-877-8762 www.trm.com
Ecom Secure Inc. Credit card processing, pay at pump retail and Internet sales. 877-937-3206 www.ecom-ca.com	Merchant Card Acceptance Canadian ISO selling card processing, gift, loyalty, ATM’ s. 888-MCA-4POS www.merchantsales.com	Vars Investment Group Inc. ATM/POS, Debit/Credit, Smart Card Loyalty and Prepaid Programs. 705-523-6245 www.varsnetwork.ca
EdgeWare Technologies Corporation Software development firm for card-based technology solutions. 905-513-0530 www.edgeware.ca	Mercury Payment Systems Merchant service provider and front-end processor. 800-846-4472 www.mercurypay.com	Verifone (Canada) Provides superior payment and, value added solutions to processors banks, retailers,
EFT Canada Inc. A Canadian and U.S. electronic transaction processor. 416-781-0666 www.eftcanada.com	Moneris Solutions Corporation Canada’ s largest processor of debit and credit card transactions. 866-MONERIS www.moneris.com	VARs, ISOs, and resellers throughout Canada 416-264-1548 www.verifone.com/ worldwide/canada/index.html
EFX Consulting Services Software development and consulting services specializing in transaction processing. 866-240-5552 www.efx-net.com	NPS GLOBAL Payment Processing PC and Web-based Electronic Funds Transfer (EFT) services. 800-931-7837 www.npsglobal.com	Adam Atlas, Attorney-at-Law Law firm specializing in electronic transactions law. 514-842-0886 www.adamatlas.com

The Frontier Times Team

Editor in Chief

Adam N. Atlas: atlas@frontiertimes.ca

Managing Editor

Anny Vexler: vexler@frontiertimes.ca

Senior Associate Editor

Valerie L. Fox: fox@frontiertimes.ca

Associate Editors

Angela R. Read: read@frontiertimes.ca

Lena E. Atlas: lena@frontiertimes.ca

Lionel Perez: perez@frontiertimes.ca

Layout*Graphics*Illustration

centre TYPO: edaley@centretypo.com

Artistic Conceptualization

Michal Katz: pichkom@yahoo.com

Production

centre TYPO: edaley@centretypo.com

Contact us:

The Frontier Times

Canada’s Electronic Transactions Journal

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The Frontier Times: Canada’s Electronic Transactions Journal is Canada’s only payment processing and merchant acquiring industry publication. Any copying or reproduction of any part or all of this publication is strictly prohibited without prior express written consent from The Frontier Times.

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© 2004 The Frontier Times: Canada’s Electronic Transactions Journal

ISSN: 1710-4505 The Frontier Times: Canada’s Electronic Transactions Journal (Print)

ISSN: 1710-4513 The Frontier Times: Canada’s Electronic Transactions Journal (Online)