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Alumni Updates — Week of April 18, 2011

By finovate Posted on April 25, 2011
Categories: Backbase, BancVue, BillFloat, Doxo, Dwolla, eToro, Kashoo, Lending Club, Mint.com, PayPal, SmartyPig, Yodlee

To follow updates from Finovate alumni companies in real time, be sure to follow us on Twitter.

Backbase extends content services offerings. Backbase CMS is available as an add-on module. http://bit.ly/finovate420112

BancVue launched “Money Island,” an educational game for children to be offered by banks and financial institutions. https://demo.moneyisland.com/

BillFloat partners with Online Resources to offer small-dollar loans to biller clients. Online Resources will now offer BillFloat as a payment option. http://bit.ly/finovate418112

Doxo signs Oregon Federal Employees Credit Union (OFECU). Members will be able to receive statements and banking documents via the service. http://bit.ly/finovate421111

Dwolla will provide an online payments option at Tikly, an online ticketing startup expected to launch within the next thirty days. http://bit.ly/finovate418113

eToro surpasses 1.5 million users. The company cites the growth of thousands of members joining per day since the launch of eToro’s social platform, OpenBook. http://prn.to/finovate421113

PayPal and Discover partner on person-to-person payments. Rollout begins this week for Discover’s person-to-person payments system. http://bit.ly/finovate42112

Several Finovate Alumni firms have been nominated for Webby awards. Good luck to Lending Club, Mint, Billeo and Kashoo. http://bit.ly/finovate420116

SmartyPig eliminates redemption fees. Transferring SmartyPig savings account funds to a retailer gift card is now free. http://bit.ly/finovate418111

Yodlee partners with Boursorama to provide Money Center service. Boursorama customers will receive the Money Center PFM service free of charge. http://bit.ly/finovate420115

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PayPal Launches Advantage Program for Frequent Buyers

By Jim Bruene Posted on December 1, 2010
Categories: Alt Payments, Email Samples, PayPal, Premium-level Products

When it comes to online marketing, I’m a sucker for rewards programs, sweepstakes, and the rarest of the rare (at least at financial institutions), premium/VIP services. So I was pretty thrilled when I got an email from PayPal two weeks ago with this headline (see first screenshot):

Jim, welcome to PayPal Advantage

According to the email, I qualified by spending $5,000 in the past 12 months (no problem considering we use PayPal to pay several business suppliers). The email included a $10 gift certificate for use with any eBay purchase (through 20 Dec.).

Taking a page from airline companies, PayPal’s main account page now contains a progress bar showing how much you need to spend to qualify for another year of Advantage membership (see last two screenshots).

The website lays out the PayPal Advantage benefits (link):

Cut to the front of the line when calling customer service
“Advantage hotline” phone number
Premium support via “most senior U.S.-based customer service specialists”
Faster dispute resolution
Exclusive events with executives meet-and-greets
Advantage member community/forum (coming soon)
Advantage member email newsletter (received one issue on 19 Nov.)
First to hear about the best shopping deals

Analysis: While none of the above is as exciting as the free travel rewards big-spending credit-card customers are accustomed to, these softer benefits are not as expensive either. And receiving recognition, combined with the red-carpet treatment from your financial provider, is an unexpected surprise and excellent customer-retention tool.

Welcome email with $10 certificate for any eBay purchase (17 Nov. 2010)

Interstitial displayed at login (27 Nov 2010, 1 Dec 2010)

PayPal Advantage landing page (link)

PayPal Advantage benefits page (link)

Widget on main page shows progress towards Advantage status

Details page showing specific progress

Summary box close up

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PayPal Announces a Slew of Developer Tools and Two Major Banking Partners: USAA and Discover Financial

By Jim Bruene Posted on October 26, 2010
Categories: Alt Payments, Discover Card, P2P Payments, PayPal

After seeing The Social Network and reading yet another post about the ramifications of Facebook’s ubiquity, I sent this out via Twitter last week:

Today, the “PayPal dial-tone” got louder with the launch of a handful of new initiatives at the company’s second annual developer’s conference in San Francisco (which drew 2,500):

PayPal for Digital Goods: Two-click checkout for low-value digital goods eliminates the hassle of logging in
PayPal Embedded Payments: Pay without leaving the merchant’s app
PayPal Apps: Allows companies to embed applications into the PayPal website: Finovate alums Credit Karma, Expensify, and Bill.com are participating
PayPal Business Payments: Electronic payments (non-credit card) of any size for just $0.50 per transaction
PayPal Mobile enhancements:
— Express Checkout provides similar two-click process
— VeriFone integration
— v3.0 iPhone app

Unless you are a developer, most of those programs mean little to you other than it’s obvious that PayPal is really pushing on the gas right now. But the banking alliances revealed today are quite interesting, assuming they make it to market:

USAA announced it will use PayPal to power peer-to-peer payments in 2011 (blog entry).
Discover Card announced a similar service, called Money Messenger (press release). No word on when it will roll out.

I’m sure there will be much speculation on whether these powered-by-PayPal services will disrupt payments, or even catch on for that matter. But it’s clear that PayPal has made important new alliances in the banking world. The dial-tone appears to be catching on, even with the establishment.

Update: More context on these announcements from Russ Jones, Glenbrook Partners, here.

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US Bank Adds Remote Deposit Capture to Online Banking Menu

By Jim Bruene Posted on August 16, 2010
Categories: PayPal, Remote Deposit Capture, US Bank

I saw a new option today when I logged in to my U.S. Bank account:

Make a Deposit

Clicking on the link brings up a screen (see below) promising that DepositPoint, a desktop-scanner-based service, is “Coming Soon!”

From the little info provided, I can see that it’s targeted to home users using existing equipment (all-in-one printer/scanners) and allows checks to be deposited through 6 PM central time for (I assume) same-day credit.

The webpage shown below is the only info available. There’s nothing posted on pricing, when it will launch, or other terms and conditions. And a search for “depositpoint” on the main website comes up empty. Interested customers are asked to “please stay tuned to this page for more exciting information!” While not exactly state-of-the-art lead capture, at least the bank is getting the word out (note 1).

In other news, PayPal moved one step closer to becoming a bank/credit union replacement with the revelation that it will add remote deposit capture to its iPhone app later this year.

U.S. Bank online banking primary navigation (16 August 2010)

Note:
1. I’m putting this in the footnote since it’s not the focus of this post. But seriously, U.S. Bank, this is the best you could come up with from a design and copywriting standpoint? It looks like a webpage from 1996. All that’s missing is the “under construction” sign. How about some color? Graphics? Links to an FAQ? This is a great development, but the customers drawn to this page from the “NEW” button are unlikely to be impressed.

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Innovations Don’t Always Work: PayPal to Discontinue Browser Plug-in

By Jim Bruene Posted on August 12, 2010
Categories: Alt Payments, Credit/Debit Cards, Desktop Presence, PayPal

For years I’ve longed for a financial institution-delivered browser plugin that would help manage receipts, verify available funds, complete online forms, and provide secure payment options at legitimate ecommerce sites. The PayPal browser plugin, launched less than three years ago, offered most of that, in theory.

I used it successfully a few times, but too often it popped up offering assistance when I didn’t need it. So I disabled it. Evidently, I wasn’t the only one who found it not worth the hassle (for more insight into the problems, read the comment thread and updates to the original announcement post). The company is pulling the plug on the service next month.

Now that PayPal’s plugin is off my computer, it’s time to give Billeo’s another try. I used previous versions in the past, but hadn’t given it a thorough test since I moved to a Mac for most Internet browsing.

PayPal login splash screen (link, 9 August 2010)

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Note: We wrote about plugins, toolbars, and tools in Online Banking Report: Grabbing Desktop Mindshare (published Aug. 2002).

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The Need for Context-Sensitive Login Security

By Jim Bruene Posted on August 10, 2010
Categories: PayPal, Security & Privacy

I’m a frequent PayPal user and need access to it on the road while logged in to who-knows-how-secure coffee-shop WiFi. Whenever I entered my password, I was hit with the unsettling realization that this could be the time I handed over my credentials to a hacker.

So a few months ago I began using PayPal’s optional out-of-band, one-time password solution. Each time I log in, a random six-digit code is sent to my mobile phone. That code must be entered to complete the login. And while I feel much more secure, the extra 20 to 30 seconds it takes is a hassle, especially after a decade of password-only access (note 1).

To improve the user experience, while maintaining the extra authentication security, I’d like to see PayPal make the following changes:

Instead of requiring the user to press the “send SMS” button after logging in, just send the SMS code automatically. I’ve logged in at least a dozen times since enabling this feature and I still forget to press the button. I usually look at my phone for 10 seconds waiting for the code until I remember that I must click the button.
Allow low-risk transactions to be authorized without the extra SMS code. I bought some iPhone chargers on eBay today for a total of $30. I would have preferred to skip the out-of-band authorization on this low-risk transaction, a small purchase made on eBay through my authenticated eBay account.

Relevance for Netbankers
The second suggestion (above), what I call “context-sensitive security control,” is an important part of the tradeoff between security and usability. As long as customers are hassled for extra info only when the risk is higher, there’s a much better chance of gaining their cooperation, and attention, in security monitoring. Many banks feed an extra security question when customers log in from an unrecognized computer. That’s a great use of context-sensitive extra security.

Another situation where context-sensitive security controls can be deployed is for determining when an account is locked for excessive login attempts. If a user is logging in from a recognized computer, they should get far more leeway in the number of password attempts before the nuclear option, full lockout, is deployed. Unfortunately for me, Chase Bank has not yet taken this step (notes 2, 3).

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Notes:
1. When we go shopping for a new business-banking relationship, out-of-band authorization capabilities will be a non-negotiable requirement.
2. Yesterday, Chase locked me out, without warning, after just 4 attempts (or was it 3?) from my main computer, which the bank knows very well. That’s ridiculous, from a recognized computer I should be able to try at least 7 or 8 times. I have multiple Chase accounts with different usernames and passwords and with a typo or two it’s easy to surpass 3 or 4 attempts.
3. Yes, I’ve whined about this before, but it’s been 3 years, so I was due.

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Logout Marketing: PayPal’s 20-Word “Bill Me Later” Sales Pitch

By Jim Bruene Posted on May 14, 2010
Categories: Advertising & Promotion, Login/logoff marketing, PayPal

Although it usually takes me 40 pages or more to get my points across in Online Banking Report, I am a strong believer in succinct online copy. I especially love online pitches that take no more words than Google’s homepage (the gold standard).

Today I found a great example after logging out from my PayPal account:

You are Pre-Approved to use Bill Me Later!
One Click. Two Questions. No Third Degree.

Choose Bill Me Later when you checkout with PayPal.

20 words. Point made. Give the copywriter a bonus.

PayPal’s logout pitch (14 May 2010)

Landing page (link)

Note: I’m counting Bill Me Later as one word since it’s a brand name.

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Mobile Firsts: PayPal Launches Bump to Pay

By Jim Bruene Posted on March 18, 2010
Categories: Mobile Banking, Mobile Payments, PayPal

This month we’ve explored several new features that promise to propel mobile banking into the mainstream market. Unlike developing nations, where mobile is the ONLY way to conveniently bank, in the U.S. and other online-centric countries, mobile has to compete with online for awareness and usage.

There doesn’t seem to be a single killer app for mobile. But a growing list of things that mobile does better than online will eventually tip the scales in favor of the new channel. Here’s what we’ve seen so far:

Location-based ATM/branch finders (here)
Remote check depositing (here)
Simple login with 4-digit pin (here)
Insurance discounts after graduating from iPhone-based program (here)

The latest addition to the list:

PayPal’s Bump to Pay (see video below): Users of PayPal’s latest iPhone app can transfer funds to each other merely by entering the amount and moving their phones within close proximity of each other (see screenshots below).

PayPal demos bump to pay

As David Eads points out at Mobile Manifesto, bumping to pay has some drawbacks in the real world:

…..most of the time I want to send money to someone, I’m not standing beside them. And if I am, most of the time I would feel awkward actually touching the person. Imaging bumping someone for admission to a high school football game. Imagine bumping a street vendor for a newspaper or flowers. Imagine bumping a scalper for tickets outside the game.

My take: I agree with David that physically placing iPhones next to each other seems awkward today. But then again, so was writing paper checks back in the day when everything was paid for in cash/coins.

If so-called bump pay is super-convenient, fairly priced, and the perceived security issues are overcome, there’s no reason why it couldn’t become the predominant method of person-to-person payments. While it’s way too early to make any kind of prediction, I’m just saying, don’t dismiss it yet.

David’s closing remark is spot on:

The key for P2P is getting people comfortable with the idea of transacting electronically between individuals. Bumping and Zooming makes it more fun.

Bumping is now an integral part of PayPal’s iPhone app

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Off-topic addendum: As much as we like new bells and whistles, bump pay pales in comparison to the really big news at PayPal this week: the announcement that it’s teaming with China UnionPay and Singapore’s DBS Bank to offer payment services. The 2-year DBS deal will put PayPal in the hands of the bank’s four million customers, 1.3 million of whom are currently banking online.

How big are these deals? A good indicator is PayPal’s plan to double its staff in the region to 2,000 employees. Wow, has any financial company anywhere in the world added 1,000 to its staff in the past two years?

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Note: For more coverage of mobile banking and payments, see the most recent issue from Online Banking Report.

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Out of the Inbox: Costco Email Gives PayPal’s Bill Me Later Top Billing

By Jim Bruene Posted on December 21, 2009
Categories: Alt Payments, Email Samples, PayPal

I rarely open emails from retailers, especially around the holidays. As someone who has checked the “send me offers” box on registration forms for a decade, I’m inundated. But every once in a while I check out the Costco email to see what outrageous deals they are offering and, more importantly, whether any financial services are being showcased. For example, in March we wrote about the $90 Sharebuilder promo from Costco.

Last Friday, the big-box giant did not disappoint. It had two financial offers above the fold:

Extended-payment option: A surprisingly large and prominent pitch for PayPal’s extended-payment program, Bill Me Later (see inset and upper-right corner in screenshot below). The BML option allows Costco customers to defer payment for an unspecified amount of time interest-free if paid in full by the due date (typically a few months out), or to pay the amount back over time at an 18.99% APR.
Costco cash cards: While it’s no surprise that the retailer is pitching store cards 7 days out from Christmas Day (see landing page below), I was surprised they weren’t merchandising them more aggressively. The problem was that even with rush delivery, the plastic card wasn’t guaranteed to arrive before Christmas, so it wasn’t a great gift option. The retailer could use an online giftcard option for instant delivery.

Costco holiday email (Friday, 18 Dec. 2009)

Bill Me Later landing page (link)

Costco prepaid card landing page (link)

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New Online Banking Report Published: Making the Case for Person-to-Person (P2P) Payments

By Jim Bruene Posted on December 15, 2009
Categories: Alt Payments, Online Banking Report, P2P Payments, PayPal

We just published the latest Online Banking Report:

Making the Case for Person-to-Person Payments
Does mobility provide the tipping point for bank-branded P2P?

Author: Jim Bruene, Editor & Founder
Published: 10 Dec. 2009
Size: 40 pages, 10,000 words
Author: Jim Bruene, Editor & Founder
Cost: For OBR subscribers: $0, all others US$495
Abstract/Table of Contents: Here (PDF)
Download or purchase: Here

Background:
If you’ve been around the industry a while, you probably remember the last time there was a lot of hype around person-to-person (P2P) payments. It was ten years ago and PayPal had just launched and was competing with three well-funded efforts from large banks: Wells Fargo, Bank One (now Chase) and Citibank.

The battlefield at the time was eBay, which desperately needed a trusted payment mechanism, to remove the friction from person-to-person commerce. Well, PayPal won that battle, taking out all three bank competitors and becoming the payment standard at eBay.

But the incumbent banks and credit unions have not lost the war, yet. They still own the customer payments relationship. And even though more than 70% of U.S. online shoppers already have a PayPal account, there are millions of customers that still want an easy way to transfer money to family members, friends, or acquaintances. And increasingly, they will want to send the money via their mobile phone.

While PayPal can handle that type of transaction, it’s not necessarily top of mind with consumers when considering how to send $65 to their sister to pay their share of mom’s birthday party.

This is something PayPal recognizes, so they are actively pursuing bank partners to offer co-branded Powered by PayPal P2P payment services. Just last month, PayPal announced deals with S1, FIS, and First Data to make PayPal solutions available to their thousands of clients. The first S1 client to publicly announce the program is Mercantile Bank of Michigan, which is already telling customers about its Q1 2010 launch of PayPal-powered mobile payments (see previous post).

About the report: Published last week, the latest Online Banking Report includes:

An overview of the product and market size
Analysis of features and benefits
A look at potential revenue streams
Forecast for online and mobile P2P payment usage (United States only)
Review of the offerings from key solutions providers and financial institutions, including the latest launch from Univest National Bank & Trust, which just launched a home-grown P2P payments service (see screenshot below)
Project priority guidance for various types of financial institutions

Companied mentioned: Amazon Payments, American Express, Bank of America, Bank One (Chase), BECU, CashEdge POPmoney, CircleUp SmartPay, First Hawaiian Bank, Fiserv, Geauga Credit Union, ING Direct, iPay Technologies, MasterCard MoneySend, Mercantile Bank of Michigan, Mobile Money Ventures, mPayy, MoneyGram, Obopay, Nokia Money, Patelco Credit Union, PayPal, Revolution Money, TwitPay, Univest Bank & Trust, US Bank, Wells Fargo, Western Union

Univest’s new P2P service featured on its homepage (15 Dec 2009)

Note: The report will be mailed to subscribers later this week.

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Sneak Peek at Mercantile Bank’s Powered-by-PayPal Mobile P2P Payments

By Jim Bruene Posted on December 11, 2009
Categories: Alt Payments, Mercantile Bank of MI, Mobile Banking, Mobile Payments, P2P Payments, PayPal, S1

Mercantile Bank of Michigan is riding the wave of free publicity from being first to market (probably) with iPhone-based P2P payments powered by PayPal. That’s a triple play in both alliteration and PR value. See the teaser ad on the bank’s website below (first screenshot).

The new service, a joint effort from PayPal and S1, is expected to go live in early 2010. It will allow customers to send money directly from their iPhone to any other individual on the worldwide PayPal network. All the sender must know is the recipient’s mobile phone number or email address. According to the five-question FAQ on the landing page (see second screenshot), the service will be available to all MercMobile customers and will be free of charge.

Mercantile Bank has become one of the most innovative banks we follow. Congratulations to CIO John Schulte and his team for leading the industry on several fronts and providing great material for Netbanker (previous posts here; note 1).

————

For more on the P2P payments market, see our latest Online Banking Report, published earlier this week, Making the Case for Person-to-Person Payments.

Mercantile Bank’s powered-by-PayPal mobile P2P app (7 Dec. 2009):

Mercantile Bank of Michigan homepage (8 Dec. 2009):
Note: MercMobile P2P Payment teaser in lower left and home-based remote-deposit capture on the top banner.

P2P payments landing page (link)

Note:
1. Mercantile even earns its very own category at Netbanker: <netbanker.com/mercantile_bank_of_mi>.

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Happy 10th Birthday PayPal!

By Jim Bruene Posted on November 19, 2009
Categories: Alt Payments, Best of the Web, PayPal

In preparation for our upcoming report, I re-read our first report on P2P payments published almost 10 years ago to the day (29 Nov 1999). Although written early in the game, I was very impressed with PayPal, a service launched two weeks earlier (15 Nov 1999) by Confinity, the original name of its parent company.

We’ve made our share of incorrect predictions over the years, but this one we got right (note 1), annointing PayPal with one of the first OBR Best of the Web awards. Here’s our take from that original report, when PayPal was available as a payment option on just nine eBay auctions:

(PayPal) is not as well known as BidPay….but as soon as (eBay) participants discover (PayPal) is free and real-time, it should catch on quickly.

PayPal was originally developed as a payment mechanism between Palm Pilots, which explains the “beam money” call-to-action on top of the original user interface (below). But I wasn’t a Palm user, so what got me excited about the service was the use of the email address to facilitate payments:

Much of (PayPal’s) press coverage has focused on the Palm application…(but) it’s the email-payment program that has the huge potential.

The rest, as they say, is history.

PayPal “send money” interface at its 1999 launch (15 Nov 1999)

PayPal “send money” today (19 Nov 2009)

Note:
1. And truth be told, we predicted that PayPal would need to hook up with an existing payment player to get past trust issues. But luckily for them, the extremely deep-pocketed VCs in the bubble days floated PayPal a massive amount of cash so it could buy its way into the wallets of consumers.

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