Payments start-up Noca takes aim at interchange Achilles heel

Payments start-up Noca takes aim at interchange Achilles heel

Noca, a startup founded by former Visa executives to address the high costs associated with credit card processing, has launched the beta version of its payment system that virtually eliminates transaction fees for online merchants.

The Noca concept is based around a facility called Secure Check which enables consumers to pay for online goods direct from their bank accounts via the Automated Clearing House network.

Noca charges only 0.25% on all transactions compared to the 2-3% plus $0.30 charge imposed by credit card companies on consumer purchases. Also, since consumers pay Noca-enabled merchants directly from their bank accounts, the company promises to remove the liabilities imposed on merchants from credit card fraud.

The company currently has only two merchants onboard, but says that implementation takes less than an hour and entails no set-up fees or upfront costs.

Pankaj Gupta, who was formerly in charge of Visa's network architecture, is founder and president of Noca. "Exorbitant payment processing fees have been a pain for merchants offering goods that carry low margins or sell at low price points," he says. "Secure Check lets merchants increase their profit margins and free up cash. It also gives consumers the choice to pay for purchases in the same way they already pay their bills."

Noca provides end-to-end encryption and stores all data at an offsite data center that is certified Payment Card Industry (PCI) compliant. The company plans to introduce real-time verification to guarantee merchant funds, as well as a consumer rewards programme to encourage take-up.

The California-based company is funded by angel and group investors, including former PayPal executives.

Comments: (3)

Peter J Cooper
Peter J Cooper - Cooper & Co - Yangon, Singapore, Sydney 11 February, 2009, 04:00Be the first to give this comment the thumbs up 0 likes

Good luck. Rewards to consumer might be their Achilles heel though. Details on www.alturnal.com or my finextra blog.

A Finextra member
A Finextra member 11 February, 2009, 16:54Be the first to give this comment the thumbs up 0 likes

Good Luck to Noca. The payments industry is growing fast for everyone involved.

Online banking is the fastest growing activity online and making payments to merchants is a welcome option for all consumers.  UseMyBank has been processing millions of online banking payments for merchants and consumers from online banks since 2002 with fantastic results.

A Finextra member
A Finextra member 11 February, 2009, 20:07Be the first to give this comment the thumbs up 0 likes

As both a consumer and a merchant it is worth considering SecureVaultPayments (http://www.securevaultpayments.org) -- it has NACHA backing.  SVP is much closer to the banks, and consumers will actually authenticate with their online bank, eliminating the need to actually have to trust a third party with ACH ABA and Account numbers, etc.  

Wisely, however, Noca seems to be taking a merchant focus on this more than end-user really.   Their focus is saving merchants money, which is probably a smart idea.

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