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Ketharaman Swaminathan

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Ketharaman Swaminathan - GTM360 Marketing Solutions

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A post relating to this item from Finextra:

EBA Clearing makes online shopping play with pan-European e-payments initiative

15 June 2011  |  8811 views  |  1
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EBA Clearing has outlined plans to launch a pan-European electronic payments service for online shopping, enabling buyers and sellers to complete transactions through their e-banking portals.

Why I Think EBA Clearing's myBank Will Be A Hit

17 June 2011  |  5170 views  |  1

 

No, not because it's innovative - it isn't. I can think of at least one provider of this type of alternative payment each in the USA, UK, Netherlands and India that has been around for several years. Called 'Secure Vault Payment' or 'SVP' in the USA, these payment methods connect online shoppers with Internet Banking portals of domestic banks selected by them (i.e. consumers). Ironically, for all the hype around its entry into payments, Google uses one such SVP - and not Google Checkout - for AdWords payments in India!  

Where myBank trumps all incumbent providers is in its awesome geographical reach and inherent ability to foster trust among consumers.

While domestic transactions are a given, myBank can also facilitate cross-border transactions within the EURO-zone. As far as I know, myBank is the only multi-country SVP payment. 

myBank is well positioned to address a major hurdle standing in the way of mass adoption of SVP, namely lack of consumer trust. Many consumers I know avoid SVP because they are wary of being ferried around their respective banking portals by third-party providers. They see potential risk of exposure of their Internet Banking credentials in the hands of these providers who are often venture-funded, startup-mode companies. This might be a perception problem since I've been assured by most providers that they can't view usernames and passwords entered by consumers into their banking portals. However, I haven't seen such an assuring message in the normal payment workflow. Besides, providers do seem to be 'looking over the shoulders' as consumers enter the credentials, so it's open to question how many consumers would take their assurances at face value. Consumers shouldn't have any such apprehensions with a bank-consortium driven product like myBank.

By using SEPA / PE-ACH rails, myBank shouldn't cost merchants any more than credit / debit card fees. Therefore, merchant acceptance of myBank should be a cinch.

Overall, myBank seems to have a bright outlook. If its vision is executed well and on time, incumbent SVP providers in the Eurozone might have a lot to fear from myBank. They might need to find ways to differentiate their offerings to survive the likely onslaught by myBank. 

 

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Comments: (1)

A Finextra member
A Finextra member | 17 June, 2011, 20:02

It is great to see that the EBA is taking a stance on the provision of Online Banking enabled Payments (OBeP's). The awareness of the benefits for all parties (consumers, banks and merchants) that this initiative will bring is most welcome.

There are a couple of points within the comments above that need to be clarified.

1) Some OBeP networks require consumers to share their online banking credentials with a third party who will then login to the bank to create a payment instruction on their behalf. Clearly this puts the consumer in a weak legal position as they will probably have broken the agreement that they have with their bank in which they promise to keep this information private. Clearly these OBeP networks are not going to be endorsed in any shape or form by the banks

2) All of the OBeP's that participate in the global ICPNO (International Council of Payment Network Operators) organisation are bank inclusive, meaning that the banks themselves become members of the network and actively promote it to their consumers. In addition, login credentials are only ever entered by the consumer at the banks own online banking site so the OBeP network operator is, by design, unable (or indeed unwilling) to capture consumer banking details of this nature.

3) The ICPNO is actively piloting cross-border, multi-currency (not just Euro) OBeP payments and two of its members (Giropay and iDEAL) have recently conducted a proof of concept with EPS in Austria to conform with the EPC's requirments.

4) Fostering trust among consumers. The facts speak for themselves: In the Netherlands iDEAL is the preferred method for consumers to conduct e-commerce. It has grown from launch in 2005 to being responsible for over 50% of all Dutch e-commerce transactions. In the US, Secure Vault Payments which went into commercial roll-out in late 2010 will have over 50 million US consumers available to conduct OBeP transactions by the end of 2011.

Online Banking enabled Payments are here to stay and will become increasingly more important to consumers, merchants and banks becuase they are safer, more convenient and significantly reduce the cost of paying online. I have no doubts that the launch of MyBank will accelerate this growth.

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