ING Direct’s Electric Orange Checking Gets Bill-Payment Facelift

image ING Direct’s (USA) paperless-checking account, Electric Orange, will get a new bill-pay user interface over the weekend (see first screenshot). The direct banking giant has also jazzed up the logo (inset) for its online checking option introduced in early 2007 (previous post).

The new GUI attempts to make bill payment more understandable. With paper and electronic delivery to merchants, person-to-person payments (also paper or electronic), and expedited payments thrown in the mix, it was hard for users to know exactly which option to select (see second screenshot for old user interface). 

ING Direct has reorganized payments into four functions and clearly identified the free (#1-3) vs. fee (#4):

1. Bill pay (paying merchants)
2. Person2Person (sending to an individual’s bank account)
3. Send a paper check
4. Overnight a check (for $20)

The company is also adding the following features (see third screenshot):

  • Electronic bill statements (ebills)
  • Email due-date reminders
  • New sorting options
  • Expanded recurring payment options
  • Simplified navigation
  • Clearly shows estimated payment arrival date

Customers have been notified through two emails that various aspects of bill pay will not be functioning beginning over the three-day weekend as the system is converted. 

Analysis: Overall, it’s a significant improvement, but there are still confusing aspects for novice users. For example, how do I decide between Person2Person and Send a Check? (see note 1) Why should I pay $20 for overnight, when the same delivery terms seem to be available in free bill pay? I’ll withhold final judgment until I have a chance to use it next week.  

1. New bill-pay interface (link, begins 25 July 2009)


2. Previous user interface (22 July 2009)


3. Landing page describing the changes (link, 23 July 2009)


1. Answer: You have to have the person’s bank account info to use the P2P option.
2. For more on bill payment, see our Online Banking Report on Epayments (also part 1) (published in 2005) and the Online Banking Report 2009 through 2018 Forecast (published Jan 2009). 

WaMu’s New P2P Funds Transfer Service, WaMu Send Direct

image When’s the last time you Googled something and found nothing? Evidently WaMu’s innovative P2P funds transfer service got lost in all the “excitement” this year and word never got out.

Luckily, I was seated beside Aliaswire (see note 1) SVP Keith Smith at dinner in Orlando two weeks ago. His company powers WaMu Send Direct, a service for P2P payments service for WaMu credit card holders, launched earlier this year at <>.

WaMu Send Direct uses a variety of methods to transfer funds with as little hassle or with as much privacy as desired (see note 2). Cost to the sender is 2% of the amount sent with a $2 minimum. Recipients pay nothing.

This makes for a good pricing model for such things as parents sending money to a child, but not so good for consumer-to-business payments, UNLESS the consumer can avoid a late payment and/or finance charge (aka, expedited payments).

In addition to the 2% fee, the amount sent is posted to the WaMu credit card as a purchase and is subject to the prevailing APR and presumably an interest-free grace period if applicable (see note 3).  

Transfers all come out of a WaMu credit card, but they can go to the recipient in any of the following ways:

  • Directly to a checking/savings account if the sender has the bank account info of the recipient
  • Directly to a debit card, ATM card, or credit card if the sender has the recipient’s card number
  • To the recipient’s phone or email address, requiring the recipient to call or log in at WaMu to claim the funds by providing bank account info; however, on subsequent transfers the recipient would not be required to contact WaMu so long as they signed up for Automatic Claim

Transfers can be initiated via:

  • Website <>
  • SMS message to specific short code
  • Telephone call to a toll-free number

It’s a cool service. It will be interesting to see if Chase continues the service as they assimilate the WaMu credit card portfolio. 

WaMu Send Direct Homepage (5 Dec 2008)


Note the text message box at the bottom offering to text a bookmark to the user. 

1. The name comes from the ability for a user to transfer funds (aka “wire”) to other users via “alias”, e.g., email address or mobile phone number.

2. Despite my longstanding policy of avoiding flow charts in NetBanker, here’s a schematic of how Aliaswire’s mPay works. mPay is the service that WaMu has private-branded as WaMu Send Direct


3. The Terms & Conditions states that the payment is considered a “purchase,” which sounds like it would qualify for an interest-free grace period on accounts not currently revolving; however, the terms did not specifically say that.

Privier Launches ATMsend, a Promising Idea that Needs Banking Partners

image I've communicated with Privier founder Charles Polanco a number of times over the years. He's a Wachovia alum who's been working on a financial startup for several years. The company launched a suite of payment services on Oct. 16 that aims to get the plastic card out of the ATM business (press release).

Privier's value prop is straightforward and compelling: Enable money transfers from any device at any time with the cash delivered through the worldwide ATM network.

The system initiates transfers in three ways:

  • ATMsend: ATM to ATM
  • iTransfer: Web to ATM 
  • mPayment: Mobile phone to ATM

In Privier's model the ATM card is replaced by a one-time authorization code that recipients key into the ATM to withdraw transferred funds.

From a usability perspective, it's a great idea. After all, what's not to like? Consumers need to send cash. ATMs have cash. Why not let folks authorize a remote ATM withdrawal from the comfort of their own home or office. A proposed fee in the $7 range beats most alternatives for long-distance money transfers.

However, from a practical standpoint there are two massive roadblocks to overcome:

  • Retrofitting ATMs to accept a keyed-in code instead of a mag stripe for authentication
  • Convincing banks to add ATM-transfer capabilities to Web, mobile and telephone services

It will likely take an organization the size of Visa, MasterCard, or Bank of America to pull this off. To ensure that those behemoths work with it, Privier has a portfolio of patents pending on the business process. 

What it means for Netbankers
It may take decades, but eventually, the Web married to mobile will eliminate the plastic debit/credit card; however, unless you are a major bank or payments company, this isn't likely anything you need worry about for a number of years.

A better short-term solution for smaller financial institutions is to enable P2P funds transfers using PayPal so you can send money to anyone with a PayPal account (see note 1).

Privier's Web-based interface for sending cash to an ATM (5 Nov 2008)SendCash_Step1

1. See our latest, the Online Banking Report 2009 Planning Guide, for more info on project priorities for this year and beyond. 

eBay Acquires Bill Me Later for Almost $1 Billion

image I won’t belabor the irony that the nearly $1 billion ($945 million) paid by eBay for Bill Me Later values the alternative payment and credit provider at more than Washington Mutual Bank and nearly half as much as Wachovia, at least before Wells Fargo entered the bidding.

The underlying credit product is relatively simple, a 19.99% credit account underwritten by Utah-based industrial bank CIT (terms and conditions here, see also note 1). But the distribution system, providing quick-and-easy delayed payment at the point-of-sale at 1000 online merchants, is what created the billion-dollar valuation. To use Bill Me Later at checkout, consumers simply provide their birthdate, last four digits of their social security number, and their billing address (see screenshot below).

According to today’s investors presentation the company will do more than $1 billion in transaction volume in 2008 and serves 4 million customers (see note 2).

I was initially surprised at the price ($945 million), but given that eBay is projecting $150 million in revenues and $50 million in profits, it makes some sense, especially if CIT is taking most/all of the credit risk. Hoped-for synergies with PayPal, which already operates a similar program, is the stated upside for the deal.

Ebay says Bill Me Later earns 4.1% on each payment transaction, which amounts to $10 per $250 purchase (note 3).  

Bill Me Later’s simple signup demonstrated at Amazon’s checkout
(5 Oct 2008)

Bill Me Later signup at (5 Oct 2008)

1. CIT is not without its own problems with a market cap that has dropped more than 80% from a year ago. The company is now valued at $2 billion, just double the purchase price of BillMeLater.

2. Some historical usage numbers: An undated entry on the CIT website says that BillMeLater has served 2.5 million consumers. In a Dec. 2006 press release announcing $640 million debt-financing from Citigroup, Bill Me Later said it had served 2 million consumers.

3.  Here are the revenue and cost numbers taken from today’s investor’s presentation (expressed as percent of transaction amount):

Transaction fee from merchant = 2.4%
Customer interest = 6.5% (note APR is 19.99%)
Customer fees = 3.6% (note late fees are generally $29 or $39 depending on balance)
Total revenue = 12.5%

Acquisition and servicing = 2.9%
Net credit/fraud losses = 3.4%
Cost of funds = 2.1%
Total cost = 8.4%

Net profit = 4.1% of transaction amount

PayPal Offers $50 Rebate at Northwest Airlines

image In the richest alt-payment bonus we've seen in a long time, PayPal users earn a $50 account credit for purchasing airline tickets at Northwest Air's between March 13 and March 27.

The bonus was prominently featured in a promotional email sent to WorldPerks members yesterday (see below). Only one bonus per PayPal account is allowed, and the fare must be at least $250. 

PayPal is also accepted at Southwest, AirTran and US Airways.

Airline Number of PayPal Transactions*
Northwest 9,018
US Airways 3,825
Southwest Air not listed
AirTran not listed

*Source: PayPal, 26 March 2007, online shopping center

Email message to Northwest WorldPerks members (25 March 2008)


Landing page (link)

image fare search
The PayPal logo featured in regular fare search at, but there is no mention of the $50 bonus.


Splash Screens: PayPal Promoting its Debit Card at Login

Logging in today at PayPal, I was greeted with a full-screen message promoting its debit card (see screenshot below). Note the prominence of the yellow Apply Now button compared to the Go to my account in the lower right. The company has offered a debit card option for more than five years and promotes it from time to time within its site.

Speaking of PayPal, the melodramatic headline on the front page of this month's Bank Technology News grabbed my attention (see upper-left corner of October issue here and inset):

Electronic Payments are a Knifefight.
PayPal's Bringing a Gun.

Evidently, there is at least one headline writer trying to make it logk like a major war is brewing between PayPal and the banking industry. Sure, they are a tough competitor, but they also facilitate a large number of profitable credit card transactions that directly benefit issuers. And I don't see how PayPal is any more of a threat now than they were last year, or the year before. 

PayPal is not going away anytime soon. Rather than worrying about the "gun" the company is wielding, banks should be looking for ways to leverage the PayPal payments platform. For example, recent Facebook apps such as Geezeo's iWant (coverage here) or ChipIn (coverage here).

PayPal Revives Domain for its Lab Site

Last century, serial entrepreneur Elon Musk launched what he expected to be a top-10 bank by now. And in true late-1990s dot-com fashion, it was simply called In retrospect, maybe not the best name for a bank, but it certainly was more memorable than First Security Bank of Whatever. The company soon merged with PayPal, dropped the single-letter name, and eventually took over the world of alt-bank payments.

For most of the past eight years, if you typed into your browser, you simply ended up on the PayPal homepage. But recently, PayPal has opened a new area under the URL called PayPal Labs. This is a place where competitors, developers, analysts, and anyone with too much time on their hands can see the latest new "beta" services under development at PayPal.

With just two services listed (see below), it's no Google Lab, but it shows that PayPal still has Silicon Valley DNA at its core, despite five years working within the shadow of the larger eBay brand.

My take: More financial institutions should open "lab sites" to demonstrate their commitment to innovation. The only one I remember was JPMorgan's LabMorgan, which was really was part VC, part incubator. But its URL only shows an error message these days, a shame. 

Update (10 Oct): A reader reminded me about Fidelity's lab site,

In the PayPal Lab

  1. PayPal Request Money for Facebook (see previous coverage here)
  2. MySpace Fundraising Badge


Geezeo iWants Facebook Users


I check Facebook about once or twice per week to see what new financial apps have been posted. So far the ones we've looked at include (see previous coverage here):

  • Lending Club's P2P marketplace
  • Prosper's Fantasy Banker
  • PayPal
  • Wesabe
  • Buxfer
  • TD Bank's Split It
  • Obopay's BillMonk

The latest entrant, iWant from online personal finance specialist Geezeo (see screenshot below). iWant is an application that allows Facebook users to share with friends their wants and needs, such as "buy an iPhone" or post more goal-oriented items such as, "pay off my student loans" or "throw a graduation party." And Geezeo ties it up nicely by tapping PayPal's API to facilitate "contributions" to the financial goals. It's also integrated into Geezeo's online personal finance application so users can track their goal progress in real time. ChipIn offers similar payment functionality in its Facebook app (previous coverage here).

I wonder if Geezeo will make a P2P lending play here? If Geezeo's software included a repayment option, the iWant "donors" could easily become iWant "lenders" and a whole new market might open up. 

If you are attending our upcoming FINOVATE conference next week in New York, you'll be able to ask co-founders Peter Glyman and Shawn Ward yourself. We are fortunate to have not only Geezeo, but two other early Facebook innovators, Prosper and Lending Club on the DEMO stage. If you can't make the event, check our website in two weeks for full length videos of each DEMO.

PayPal Really Launches on Facebook

PayPal application shown within a Facebook profile Two weeks ago I heard from PayPal corp communications who felt that my “PayPal launches on Facebook” title was misleading. They had a point. As I explained in the post, the new Facebook app was PayPal-powered but developed by Australia’s Yellow Media. The title could have been better.   

However, that’s moot now since PayPal has now launched its own app on Facebook (here). It appears to have been posted on July 3 and has 218 users as of this morning. The application provides a simple interface to request and track money requests from Facebook friends (see inset above). Additional functionality is said to be on the way.

Mobile Banking & Payments Terminology

In 2007, we'll be spending more time researching mobile banking, payments, and finance applications. So that we all understand each other, here are some of the key terms that will be used:

General terms/acronyms:

SMS >>> Short message service (also known as text messages, texts, SMSes, txts): A service available on most newer mobile devices that permits the sending and receiving of text-only messages; also can be sent to and from personal computers or even landline phones

MMS >>> Multimedia messaging service: An evolution from SMS, allowing messages to contain multimedia objects such as images, audio, video, and rich text 

CSC >>> Common short codes: Special short telephone numbers of just four to six digits used typically by businesses to make it easier to send text messages their way (the Mobile Marketing Association has a helpful primer here)

WAP >>> Wireless Application Protocol: An open, international standard for applications that use wireless communication; primarily used to enable Web access from mobile devices

Mobile IM >> Mobile instant messaging: Similar to desktop instant messaging, but slimmed down to fit on a much smaller mobile device screen

Banking & finance terms:

SMS or text alerts: Simple one-way messages from the financial institution or payments provider to the mobile user with account-specific information

Mobile payments: Payments initiated through a mobile device, could be via SMS, WAP, or a device-specific application

Mobile banking: Online banking functions performed via a handheld mobile device (PDA, cellphone, etc.); the general term that encompasses WAP Banking, SMS Banking, or True Mobile Banking (see below)

WAP banking: Accessing secure online banking functions through a mobile device's browser

SMS or text banking: Two-way messaging; for example, using text messaging to query the server for account-specific information and have it returned to the mobile device, or responding to a bank-initiated text message to initiate a transaction

True mobile banking: Our term for banking functions delivered through a downloaded application run locally on the mobile device

Sources: Online Banking Report, Mobile Marketing Association, Wikipedia

Billeo Scores Distribution Deal with Target REDcard

Automatic bill pay description at CLICK TO ENLARGEIn a distribution deal similar to the partnership launched earlier this year, Billeo is now powering biller-direct payments for Target's REDcard (see inset). See previous coverage here.

Billeo received an Online Banking Report Best of the Web award in 2005 for its innovative toolbar-based payment services (see 15 March 2005 post).

How it works
New users start by searching for credit-card-accepting billers via zipcode and company search (see screenshot below).

To schedule a payment and use the other tools, users must first register with Billeo. While the initial biller-search screen runs under Target branding, the sign-up page and subsequent user interfaces do not maintain any Target branding.

Previous Billeo users can skip the registration process and simply sign in to their previous Billeo account.

Biller search powered by Billeo CLICK TO ENLARGE