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In a recent research report, the European ePayment Systems Observatory (ePSO) examined the state of scratch cards as an Internet payment mechanism in Europe and concluded that although several attempts have failed, their simplicity and familiarity to consumers make scratch cards likely to succeed if they can reach critical mass. This research report takes a step back from that conclusion to explore some of the larger challenges that prepaid card schemes face in the market, with particular emphasis on the underlying cost model, the barriers to entry, and the end-to-end value proposition. It concludes with recommendations for all prepaid card providers if this new online payment mechanism is to survive in today's market.  Common Merchant Payment Toolkit Solving an Ever-Growing Need in Alternative Payments By Russ Jones / July 2001 In the last several years the Internet community has seen a staggering number of new companies propose alternative payment systems that address specific underserved communities of online buyers and sellers. While several alternative payment providers—from InternetCash to e-gold—have come forth with unique consumer value propositions, all of these have nearly identical merchant value propositions. This research report examines alternative payment systems from the perspective of the merchant and suggests that almost all payment industry stakeholders would be better served by a common merchant payment toolkit for alternative payment systems. The report argues that the existence and widespread deployment of such a toolkit would increase the market adoption of new, alternative payment instruments. The PayPal Phenomenon Lessons from the Leading Edge of Online Payments By Russ Jones / November 2001 In a brief two years, PayPal has emerged as the most successful new payment service provider on the Internet. Growing at a rate of 18,000 new accounts per day atop a base of 10 million registered users, PayPal, more than any other service, is shaping how the online community thinks about consumer payments. While the traditional financial services industry looks on—partly in contempt, partly in awe—PayPal continues to bear down: focusing on customer needs, methodically expanding its service, and steering toward profitability. This research report examines PayPal's clear market success to determine what lessons can be taken away by others in the financial services industry. After describing how the service has evolved into a point-to-point payment service, it looks at the company's customer value proposition, innovative marketing approach, and overall positioning in the payments industry. The report concludes by distilling the lessons learned from PayPal into six simple rules for developing new payment services.
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