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The Latest News, Industry Insights and Research Findings on Global Payment Markets

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30Apr/12

Visa to Launch Digital Wallet Service V.me in Europe

By Martin Schuppelius
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Payment Observer industry spotlight includes small business solutions providers. Learn more on their website.

last year and is now moving into the European market.

Similar to PayPal, V.me by Visa enables customers to store their credit card details into a digital wallet. Instead of entering their payment and shipping details every time they want to shop online, users can use V.me for the checkout process. The service is not limited to Visa cards; MasterCard, AmEx and Discovers cards are also supported. According to Visa, V.me will also provide features beyond payments such as transaction alerts, promotions and reward programs. “Our intention is that V.me will ultimately be able to incorporate any or all of our new payment technologies, allowing our members to deliver the best possible payments experience whether face-to-face, online or in a mobile environment,” said Mariano Dima, Executive VP of Product and Marketing Solutions at Visa Europe.

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27Apr/12

Alternative Payments: What is Bitcoin and How Does it Work?

By Martin Schuppelius
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The Bitcoin logo

Bitcoin is an electronic currency and payment system based on cryptographic algorithms to enable secure and irreversible direct transactions between parties. It is different from other currencies as it is fully decentralized and does not rely on a central issuer. This means it is not backed by a country or government as conventional currencies are.

Bitcoin was first introduced in 2008 by Satoshi Nakamoto’s Whitepaper: “Bitcoin: A Peer-to-Peer Electronic Cash System”. He also developed the first version of the open source Bitcoin client which was used to start the Bitcoin Network in 2009. Bitcoin is not the first concept of a digital currency based on an asymmetric cryptographic algorithm but it is the first real-world proof of concept of that idea on a large scale.

How does it work?

The Bitcoin network is created by a peer-to-peer (public key infrastructure and uses digital signatures to verify transactions. Using the Bitcoin software, users can generate asymmetric key pairs: a private key that he has to be kept secret and a public key that can be shared. The public part of the key pair is used as the Bitcoin address. Bitcoins (abbrev. BTC) are transferred between these Bitcoin addresses.

Asymmetric key signature scheme

A Bitcoin transaction consists of the senders address, the receivers address, and of course the amount of Bitcoins. The sending party signs the transaction with its private key. The transaction is then broadcast to all nodes of the Bitcoin Network. Due to the asymmetric encryption every Bitcoin client can easily verify the transaction but only the user that has access to the private part of the key can create a valid transaction for that Bitcoin address.

This means that only the user that has access to the private key of a Bitcoin address has access to the amount of Bitcoins assigned to that address. The key pairs are stored in the so-called Bitcoin Wallet. A loss of the Bitcoin Wallet (and thus the private keys) results in a loss of the assigned Bitcoins – as would be the case with a real wallet.

The Bitcoin block chain

Bitcoin clients collect and store valid transactions into blocks. A block contains all valid transactions that have not yet been stored and a reference to its predecessor block. Because of the reference to the prior block, the collection of all blocks forms the Bitcoin block chain which is distributed to all clients in the network.

The Bitcoin block chain (blue) including the genesis block (green)

To create a valid block it has to be signed with the solution to a mathematical difficult problem. The problem is a proof-of-work system that confirms transactions and prevents double spending. An attacker could only change the transaction history if he has more computation power that the rest of the Bitcoin network.

Each block generates a certain amount of Bitcoins as a reward for the client that solves the problem and creates the block. The process of competing to solve the current block is called Bitcoin Mining. The difficulty of the problem is adjusted by the network so that on average a block is generated every 10 minutes.

Wrap-up

Bitcoin information portal weusecoins has created a nice video explaining Bitcoin. Enjoy!

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26Apr/12

Research Report: China to Become the Largest Mobile Payment Market – Worth $80B by 2015

By Gary Merrett
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Payment Observer industry spotlight includes small business solutions providers. Learn more on their website.

Kapronasia, a research and consulting company focusing on the financial industry in Asia, the Chinese mobile payment market will be worth more than $80 billion with 331 million active users by 2015.

Although China has already surpassed the U.S. as the biggest smartphone market, the penetration rate is still low (less than 10%), leaving a giant scale for growth. Zennon Kapron, managing director of Kapronasia believes that “2012 will prove to be a crucial year for the mobile payments industry as Chinese authorities establish final technology standards”. Kapronasia estimates that the mobile payment market in China will roughly double its size every year (estimated at $7.6 in 2011) and become the largest mobile payment market by 2015.

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24Apr/12

DIMOCO Launches Carrier Billing in Southeast Europe

By Gary Merrett
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latest expansions, the company’s mobile payment service is currently available in 23 countries.

Gerald Tauchner, DIMOCO CEO commented: “We are successively expanding our backend infrastructure to become a global payment service provider. Especially in SE Europe we are seeing above-average acceptance by the population for the new business models on the Internet, with payment by mobile phone increasingly becoming the billing method of preference. For this reason we have decided to round off our existing country portfolio in the Balkans with these four countries.”

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19Apr/12

Interview with Florian Swoboda of Online Cash Payment Startup Bar Zahlen

By Martin Schuppelius
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Florian Swoboda, co-founder of Zerebro Internet

Berlin-based startup online cash payments to Germany. Bar zahlen basically enables customers to pay for their online purchases at retail stores. We sat down with Florian Swoboda, co-founder of Zerebro Internet GmbH, the company behind Bar zahlen.

Payment Observer: Can you give us some background information on Zerebro Internet?

Florian Swoboda: Bar zahlen was founded by Achim Bönsch, Sebastian Seifert and myself, Florian Swoboda, in March 2011. Since then, our team has grown constantly and we have gathered a heavily IT-focused team of about 25 people around us in order to make online payments available for everyone – just like cash. The company is backed by renowned e-commerce investors and experts such as Florian Heinemann, Martin Sinner and Christian Weiss.

Payment Observer: Online cash payments – how does that work?

Florian Swoboda: The customer shops in an online shop of his choice. He selects Bar zahlen as the payment option. After completing the order, a PDF document with a bar code opens. The customer prints out this document and takes it to the next Bar zahlen partner store. There, the cashier scans the bar code and the customer pays his online order. The cash register system instantly sends the payment confirmation to the online shop which immediately sends out the product.

Bar zahlen's online cash payment solution

For users who do not own a printer, we also offer a mobile option that can be used with every phone and not only smartphones.

Payment Observer: How did you come up with the idea to start such a service?

Florian Swoboda: We simply saw a huge problem in e-commerce which is payment. Actually a third of all customers drop out of the order process when selecting the payment option. We were asking ourselves why payment has to be such a conversion killer and why the problem does not exist in stationary trade. So we figured: What’s missing online is the simplicity of cash. With 82% of transactions, cash is the most popular payment method in Germany. Cash is secure and accessible for everyone. You don’t have to register and you don’t have to reveal your financial data to a shop or to a third party payment provider where you can never really be sure how your data is stored.  People are experiencing the current online payment methods as being very complex and many customers are lacking a sense of security when providing their financial data online. That’s why we want to offer an easy and secure online payment option that is available for everyone.

Payment Observer: When are you planning to launch Bar zahlen?

Florian Swoboda: We will launch Bar zahlen in the third quarter of 2012.

Payment Observer: Can you already share with us who your retail partners are?

Florian Swoboda: I’d love to but unfortunately I can’t. What I can reveal is that we are cooperating with well known, nationally represented retail chains in order to provide convenience and a maximum of security to our customers. We will disclose the details right before our launch in the summer.

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12Apr/12

Infographic: The Rise of Mobile Payments

By Gary Merrett
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Need a cash or credit card processing solution for your business? Payment Observer has more details you can learn by visiting their website.

Truaxis, a U.S.-based company that provides loyalty rewards and personalized statement services to financial institutions has published a nice infographic on the rise of mobile payments. Enjoy!

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11Apr/12

Innovative Payment Companies: iZettle – Mobile Card Processing the Swedish Way

By Martin Schuppelius
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Payment Observer industry spotlight includes small business solutions providers. Learn more on their website.

iZettle provides a mobile payment service that allows businesses and individuals to accept credit and debit card payments using their iPhone, iPad or iPod Touch.

The company was founded in April 2010 by Jacob de Geer and Magnus Nilsson and recently received €8.2 million in funding led by Index Ventures.

Availability

Since its launch in Sweden last summer, iZettle has attracted 25,000 active users and has grown the point of sale market in Sweden by roughly 15%. The service is also available in Denmark, Finland and Norway with more to come in 2012.

How it works

PayPal Here iZettle is also EMV (Europay, MasterCard and VISA) approved and supports chip-enabled cards, which are very popular in Europe.

Pricing

iZettle has no set up fee or monthly fee. For each transaction iZettle charges 2.75% of the transaction volume plus €0.15 (including bank fees).

In a nutshell

iZettle provides an innovative solution for accepting credit and debit cards on the go. Unfortunately the service is only available in the Nordics so far.

Check out the video to see how iZettle works:

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10Apr/12

Payment Startups: Interview with Bill Ready, CEO of Braintree

By Martin Schuppelius
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Bill Ready, CEO of Braintree

Have you wondered why so many web 2.0 companies such as OpenTable, Fab.com, and Airbnb choose Braintree to process their payments? We caught up with Braintree’s CEO Bill Ready and asked him this question.

Bill Ready has joined the company as CEO in October last year. He came from Accel Partners, where he was an executive in residence focusing on payments and financial technology.

Braintree provides an online payments platform that allows online businesses to process credit card payments. The company has recently released a set of tools for mobile app developers that enable merchants to accept payments within an app.

Payment Observer: Can you give us some background information and numbers on Braintree?

Bill Ready: Braintree helps online and mobile businesses process credit card payments by providing a merchant account, payment gateway, recurring billing and credit card storage. The company is disrupting the payments industry by providing elegant tools for developers coupled with white-glove support. Founded in 2007, Braintree works with the world’s most discerning online merchants, including LivingSocial, Airbnb, Uber, Hotel Tonight, 37signals, OpenTable and GitHub. The company is processing more than $4 billion in annual credit card volume from more than 2,000 merchants. Braintree was profitably bootstrapped for four years before accepting a $34 million investment from Accel Partners in 2011. Braintree ranked 47th in the 2011 Inc. 500.

Payment Observer: Why do so many web2.0 companies use Braintree?

Bill Ready: Our solutions are designed specifically for Web 2.0 and mobile companies to take the pain out of payment processing. Braintree’s focus has always been to make payment processing easy for developers so they can focus on their core business, not payments. Historically, developers were dissatisfied with PayPal, Authorize.net and other payment processing options. These solutions were dated and were not designed for developers. The industry had also been known for unscrupulous business practices, including hidden fees and holding merchants’ data hostage if they attempted to switch providers. With Braintree’s solutions, developers can integrate in minutes rather than months using Braintree’s client libraries in 7 different programming languages and 3 different mobile platforms.  They also have confidence that the solution will scale with their business, and the peace of mind that if they are ever less than satisfied they can easily take their data to another provider.

Payment Observer: What’s your opinion on m-commerce and mobile payments?

Braintree's Transparent Redirect API

Bill Ready: Mobile commerce growth will continue to outpace that of online as mobile usage has already exceeded online usage. Because mobile is becoming such an important channel for growth, it will be increasingly important for companies to focus on continually improving the user experience in completing a purchase on a mobile device. Companies can realize higher purchase volumes if they provide an easy checkout process that doesn’t require consumers to re-enter credit card information on a mobile device or leave the mobile site.

Braintree handles millions of dollars of mobile payments volume every month, and we recently released three new mobile client libraries that enable e-commerce merchants to easily and securely accept payments within a mobile app, rather than through a web browser. We wanted to help solve a problem for mobile app developers who want to provide a simple, elegant purchasing experience for their customers while remaining PCI compliant.

Payment Observer: How are mobile payments different from online payments?

Bill Ready: There are certainly similarities between the two, however, there are also important differences.  User experience is much more important in the mobile environment since the form factor makes it more difficult to enter card information.  If you can create cross-channel integration where the user’s card is already on file from their last visit to your website, you can significantly improve ease of use. The speed of the transaction also matters as bandwidth may be more limited, an issue exacerbated by some payment providers that rely on multiple trips across the mobile network to achieve a payment. Finally, security takes on new implications in the mobile environment.  Encrypting card data directly on the mobile device is important in order to deal with the additional data security risks inherent with mobile devices.  For these reasons, it is important to choose a payments provider that has tailored solutions specifically for the mobile environment.

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5Apr/12

Infographic: The Value of Mobile Payments

By Martin Schuppelius
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Payment Observer spotlight company. See more details here about one of the up and coming service providers in the financial services for small business.

Mobile payment provider (more…)

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4Apr/12

Focus on Alternative Payments: Bar Zahlen Offers Cash Payment for Online Shoppers

By Martin Schuppelius
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PayNearMe launched in the United States last year. PayNearMe enables customers to pay for e-commerce services at 7-Eleven stores, convenience stores that can be found everywhere. Most recently Berlin-based startup Bar zahlen announced to introduce the concept of online cash payments to Germany.

Cash as online payment method

Here’s how Bar zahlen works. Online shoppers can select cash payment in the checkout process when purchasing goods from a participating online retailer. Instead of providing payment details, customers have to print out a receipt with a barcode. Now the customer has to go to a retail partner where the barcode gets scanned and the customer can pay at the regular point-of-sale terminal. The payment does not necessary have to be made in cash. In fact, all payment methods supported by the retailer are accepted. The online merchant will instantly receive a confirmation after the payment is successfully completed.

Benefits: No payment details online 

Having the possibility to pay at local stores is certainly a interesting option for customers that do not want to share their payment details with an online merchant or do not thrust e-commerce payment solutions. The service is also an option for people that don’t have a bank account or a credit card. Teenagers for example can shop online or pay for online games with their pocket money.

In a nutshell

Bar zahlen can enable shoppers in Germany to pay for their online purchases at local retail stores. The service is a promising alternative for those who do not want or cannot use traditional online payment methods

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