Billing firm smooths e-payment process - Company Business and Marketing

CommunicationsWeek International, May 8, 2000 by George Malim

Anew London-based company is launching what it claims is the first global on-line billing service, allowing users to purchase goods from e-commerce sites via their telephone bill as well as via proprietary payment and pre-paid cards.

Global Internet Billing (U.K.) Ltd. (GIB), setup last year by former executives at Interoute Ltd., aims to make e-commerce available to a wider audience.

"It is possible that [Internet billing] will allow users that don't have credit cards, or live in areas where there is not a predominance of credit cards, to conduct on-line transactions," said Scott Smith, director of Internet strategies, at the Yankee Group Europe, of Watford, England. "Consumers have shown through the last 100 years that they like aggregated billing through their service provider."

But he added that on-line billing services that try to operate without the backing of credit card organizations have not yet found widespread favor. "Billing systems that operate other than by credit cards have been something of a sideshow," said Smith. "Consumer acceptance has been low and the type of products suitable for Internet billing have not been available."

According to Nick Gibson, analyst at Durlacher Research Ltd., of London, it's a very hot area. "The billing aspect of the digital distribution value chain is just one element and there are many other elements to it such as CRM [Customer Relationship Management]," Gibson said.

As new products and services fit the profile of low-value e-commerce transactions, companies such as GIB, which has launched its Chargit product for payment via a telephone bill and is launching its chargitCard service on 23 May, are aiming to cater for this developing market.

The Chargit service enables users to pay for goods purchased from e-commerce sites via their telephone bill. In a typical implementation, the surfer downloads GIB's 30-kilobyte "dialer" application and clicks on GIB's icon at the point of purchase. Their Internet call is then disconnected and reconnected through GIB, which acts as a premium-rate ISP. The premium charge appears on the enduser's telephone bill and is administered through the user's telephony service provider.

Nigel Wallbridge, chief executive of GIB, said the service will be most attractive to vendors of "weightless goods," such as downloads of software or music clips. Wallbridge claimed that Chargit currently handles an average of more than 100,000 minutes of calls per day worldwide.

GIB is not unique in the market for Internet payment vehicles. Wallbridge acknowledged there are about 15 vendors of dialer products for Internet billing, but claimed none has GIB's global reach. "We're working worldwide already and this is very attractive to merchants," said Wallbridge. "BT could do this for themselves but couldn't do it in France, for example."

Seattle, Washington-based eCharge Corp. offers a similar online payment service called eCharge Phone. The company also has a global presence with activities in Europe, the Pacific Rim and the United States, and has backing from Deutsche Telekom's investment arm T-Ventures and Korea Telecom.

Both GIB and eCharge have plans to develop a range of payment vehicles and credit facilities for merchants. "The credit card market place offers huge opportunities," said Wallbridge. "There is lots of credit card-based fraud and banks are stepping back as a result of the risk profile."

These companies claim significant cost advantages over banks and credit card providers offering e-commerce services. "The banks and credit card companies have moved their real world payment vehicles fully formed, with legacy infrastructure, into the virtual world of the Internet but with associated real world costs," said Ron Erickson, chairman of eCharge.