SMALL BUSINESS | SAFETYPAY
Miami Beach firm touts safe way to pay online
A Miami Beach company is trying to fill a niche by offering an Internet payment system as an alternative to using credit cards.
BY INA PAIVA CORDLE
Whether you live in Miami, Mexico City, Madrid -- or almost anywhere else -- the Internet lures you with all its shopping options.
But what if you don't have a credit card, fear fraud or identity theft and perhaps you are purchasing something from a merchant in another country that won't accept your card?
SafetyPay, a Miami Beach company, is trying to fill that niche, offering an Internet payment system as an alternative to using credit cards.
Founded by five former American Express executives and backed by venture capital funds, the 2-year-old company is growing and hiring more employees. And its next frontier is mobile, which it is already testing.
Despite the recession and competition from larger, more well-known and better capitalized competitors, it's a small business surviving by discovering a worldwide need and then crafting a service to meet it.
``SafetyPay was created because we believed -- and we knew -- that the existing payment system, i.e. credit cards, could not do the job for all parties involved in the Internet,'' said founder and chief executive Manuel Montero.
SafetyPay works by partnering with banks and merchants to allow their customers to pay for online purchases directly from their bank accounts. It started in 2008, but its founders worked for about two years before that to lay the groundwork -- designing software, registering trademarks and analyzing the industry, Montero said.
Their research showed that three market segments were not being served: people who do not have credit cards, people who have credit cards but are afraid of fraud or identity theft, and those who use credit cards but when they shop on the Internet internationally, they find that merchants will not accept them.
The key was finding these customers, said Montero, 60, who is originally from Spain and was formerly CEO of Fiera.com , general manager of American Express Spain and division vice president of American Express, where he was responsible for the launch of the company's Latin American business.
The solution was to work through banks, which already have millions of online banking clients, he said. SafetyPay shares revenue with banks, in exchange for making its service available to their customers and providing joint promotions.
For banks, it turns online banking into a new revenue opportunity, Montero said.
SafetyPay has 23 banks signed up worldwide, which combined have 17 million online customers. Among the banks are ScotiaBank, Citibank Banamex, Santander, Banco Nacional de Costa Rica, Bancomer, Ibercaja of Spain, Bank of Austria, Banco de Credito of Peru and Banrisul of Brazil.
Another Brazilian bank is expected to join early this year.
Lima-based Banco de Credito has seen more than 1,000 SafetyPay transactions per month, said Christian Burger, commercial executive of business services for the bank.
``It's a very innovative mechanism,'' he said.
On the other side of the transactions, SafetyPay has 1,300 merchants worldwide, including Sears, Nike, Aeromexico, Palacio de Hierro and Peruvian Airlines. Its goal is to add another 300 foreign and 1,000 U.S. merchants this year.
Jean Pierre Matallana, sales manager at Peruvian Airlines, said ticket sales through SafetyPay have been increasing each month.
``It's a very good option for us,'' he said.
Similarly, Miferta.com , a discount offer site in Costa Rica, has about 25 percent of its clients -- or between two and 15 a day -- using SafetyPay, said Jack Raifer, marketing sales manager of Miferta.com.
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