The New Aussie Gateway to eBay | BTalk Australia

(7min 39) 2009 has got off to a good start for Australian online payments provider Paymate, who has announced an arrangement with eBay that will significant broaden the market for their product, particularly in the US.

In today’s BTalk Australia Phil Dobbie asks Dilip Rao, the Managing Director for Paymate, what makes his service different from other payment options.

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• Today’s Transcript

Phil Dobbie: Hello, I’m Phil Dobbie and welcome to BTalk Australia where today we look at payments on eBay. There was a choice of one payment provider, but soon there’ll be more, thanks to the Aussies. Early last year, eBay tried to make it mandatory for payments to be made using PayPal. They backed down slightly, saying sellers needed to offer PayPal as an option for buyers, but other payment types could be accepted. But there was only one choice for online payments: PayPal, owned of course by eBay. That clearly had to change.

Dilip Rao: Offering a choice of one may not be the most attractive to membership. They decided that they would invite selected payment providers who they believed could meet their sales level agreements and also keep buyers and sellers happy.

Dobbie: That’s Dilip Rao, the GM for PayMate, which is an Aussie online payments provider, who’s been involved with Ebay in the past.

Rao: When we launched PayMate in Australia, it was in fact with eBay Australia. So we were the first payment option offered by any eBay subsidiary around the world.

Dobbie: With this history behind them, PayMate were understandably upset when eBay declared PayPal the exclusive online payment solution for eBay. So they wrote to the ACCC, saying eBay were breeching the Trade Practices Act. The result was eBay approached PayMate to offer an alternate solution for their sellers.

Rao: So, yes, it was regrettable that in April this last year they wanted to mandate PayPal and I guess our case was that we were an equivalent option, in terms of safety for buyers and sellers. To PayPal and the ACCC agreed with us.  This approach in fact was not from Australia, it was from eBay.com, which is the US mothership, if you will, and I guess it’s a bit of a testament to the fact that we are already professional in what we are presenting, that we were still considered as people that they could work with.

Dobbie: So from next month, users of eBay.com will have a choice as to which payment solution they provide and sellers can register with PayMate and add it as an option for their buyers.

Rao: They buyer can then click on that button. It takes them to a payment express payment page and basically we will be able to pull the information about the buyer, about the seller, about the item for sale, from eBay’s database, which is part of the integration that we are completing now. To be able to populate our payment page, the buyer then keys in their credit card details. They don’t really have to register with us and they authorise the payment.

Dobbie: Right.

Rao: And we can integrate back into eBay to let everybody know what’s happened with the payment so that people can continue to run their businesses on eBay.

Dobbie: Will it work though? Will people choose a relatively unknown player to handle their payment? Isn’t it a bit of a risk? Dilip Rao says that the risk is minimal.

Rao: In Australia, we hold an Australian financial services licence and what that means is that we are regulated by the Australian securities and investment commission. That means that we had to meet a whole number of financial compliance requirements in terms of cash on hand, systems and procedures by which you know, we protect people’s money. We are audited, both in a financial sense and also from the point of your compliance with the licence regulations. People can be quite confident you know, that their money’s protected. In general, we don’t actually hold onto money very long. It does go through our clearing account, but typically pay our sellers the same night. So usually we actually we are paying people exactly the same time as we receive the money.

Dobbie: It all sounds like a mammoth opportunity for PayMate doesn’t it? But will they be able to cope with the demand?

Rao: It would be a nice problem to have, Phil. We made the announcement on the 9th of January and by the 12th, I think, a couple of days later, we had signed up almost 200 people out of the US, just based on the small announcement that we had made. And the service isn’t available, it’ll be available late in February. So we certainly hope that there will be a fair number of people who will give us a go and I guess what we are trying to do is to differentiate from PayPal and the others, primarily on three things: one is risk management — we think our risk management is superior to anybody else, and that sellers will lose less money if they use PayMate. That’s certainly the experience today. Secondly, we will pay people in the US faster than they get paid today. In Australia for example, we are able to pay most of our sellers the same night. So it’s very much like having your own merchant facility. And thirdly, our client service has been graded eight out of ten every year for the last seven or eight years. So we think people will experience a much more personalised and responsive service that they would from anybody else.

Dobbie: And you don’t need to be an eBay seller to use PayMate. You can use it to sell from your own site in much the same way. You register as a seller and your buyers will be redirected to a secure page on the PayMate site to make the payment. But don’t the banks do that as well?

Rao: Well, banks typically work on the basis of protecting their cardholders. Say the bank issues credit cards to a number of people, what it has is data about the usage of that card by that cardholder. So the time that they can tell that something has happened is if it’s their own cardholder and that the transaction doesn’t fit the pattern. What we do is that kind of thing, but in a more sophisticated way. For all cardholders, regardless of which bank they’re with.

Dobbie: Managing risk is a big part of online payments. The vendor is liable and credit card fraud is on the rise. Dilip Rao says that managing that risk is a big part of what they do for sellers using the PayMate solution. Watching credit card numbers against the database of five or six billion credit card transactions, to ensure that the transaction is genuine and the credit card owners are who they say they are. So it all sounds like a bright future for this Aussie payment solution provider.

Rao: Obviously online has a future. We think that more and more people will buy from people that they don’t know, which means that there’s a role for a brokered payment service like ours where we manage the issue of trust between buyer and seller. And yes, we are a small privately held company, a bunch of investors, if you will. But you know, we are operating in something which is a global marketplace and I guess the decision by eBay to be integrated at either checkout, is recognition of our credentials as a global provider.

Dobbie: That’s Dilip Rao, the managing director for PayMate, available soon as a payment choice on eBay.com.