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Thursday, September 18, 2008

A rival to PayPal?

Richard Brierley-Jones, Executive Vice President of eWise Systems Ltd., the network provider for NACHA – The Electronic Payments Association's Secure Vault Payments in the United States, founded the International Council of Payment Network Operators in early 2008 for one purpose: to create and implement standards for global interoperability of alternative online payment networks.

The ICPNO will address creating rules for cross-border settlement, exchange rate rules and funds movement for payments initiated online from participating networks. The council intends to construct the groundwork for a system that would link all member networks and allow merchants and consumers in one country to do business with those in another through online banking systems.

Connect the dots

"There is a particular type of network that we are looking to create interoperability rules for," Brierley-Jones said. "Although the design and concept is similar, this is a new alternate payment form that is owned and operated by the banks. We saw the growth of these networks, but the interoperability component was missing. Payment networks were isolated in their own country."

The main challenge for the council will be to understand the pricing models, processing technologies, network rules and settlement processes for the distinct countries' networks. The ICPNO's goal is to enable interoperability between the member networks and create one set of international set of operating rules.

However, the ICPNO doesn't want to create a new set of settlement structures. "Our intention is to leverage the existing international settlement rails under the agreed ICPNO rules," Brierley-Jones said.

Connect the countries

Brierly-Jones added that he has seen the growth in alternative payment options like PayPal, Google Checkout and Bill Me Later, and believes the emergence of these alternative networks are eroding banks' traditional model of income for online payments. "All kinds of initiatives are being brought about by the banks who are now trying to get back into that space and regain that market share," he said.

Brierley-Jones believes creating interoperability of payment networks worldwide will give online merchants access to literally hundreds of millions of customers.

"If you think about what the customer base is for all these networks, we've got potentially in excess of 50 to 60 million customers," Brierley-Jones said. "We could gain a significant international consumer base that could rival any of the other alternate payment forms. PayPal says they've got about 160 million accounts. Feasibly we could overtake that number of payment-enabled consumers within a short space of time," he said.

Connect the value adds

The ICPNO spokesman said the council is focusing initially on consumer purchases, but the potential for value added services available to ISOs and merchant level salespeople is tremendous in the business-to-business, person-to-person and mobile banking markets.

"Obviously for acquiring services this opens up an opportunity for them to provide value added services onto the merchants and wrap around their services such as processing and gateway services around the network services that the ICPNO will be providing," Brierley-Jones said.

The ICPNO expects to do its first international transaction toward the end of 2009. end of article

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