Noca, an online payments start-up we wrote about last year, is officially launching its payment service today. Formed by ex-Visa employees, Noca originally offered a micro-payments system via two Facebook applications, OneClickPay and HelpYourWorld. The company is now offering payment services for unlimited amounts. Currently, Noca has two clients; digital content provider Klatcher.com and a local little league site. The advantage of Noca’s system is that it allows online merchants to bypass high transactional fees (usually 2-3 percent plus $0.30) imposed by credit card companies on consumer purchases.
Whether using Google Checkout, PayPal or Amazon Flexible Payment Service, merchants have been unable to avoid these fees, which can be pricey on expensive or luxury items. Until now. Noca’s online payment service only charges 0.25 percent on transactions and eliminated the fixed $0.30 fee all together. Once Noca’s system is enabled, the consumer’s issuing bank underwrites the risk so that the merchant receives payment within 1 to 2 business days.
On the consumer side, Noca assures security and prevention of identity theft because the transaction avoids credit cards and uses debit transactions instead, where the money goes directly from the buyer’s checking/savings account to the merchant. The user enters account and routing numbers into a virtual check, in a process which the company insists is secure. After entering routing and checking numbers, Noca will then send a text message with a code to the user’s cell phone, which needs to be inputed for the transaction to be completed.
With credit tight, consumers might feel more comfortable paying for items directly from a checking account. And it assures security for both merchants and consumers. Can Noca give PayPal a run for its money?
Can’t see this model working too well for payments to the tune of $10 when it costs some $25 to send an internationally routed payment through most Australian banks
Probably somewhere equivalent other places in the world too.
Interesting, but not sure how people will take to providing their bank account numbers online. It took a while for users to feel secure that their credit card numbers were safe but direct to bank is a whole new level.
When you write a check everybody and their mother already have this number so I know what you are really protecting and bringing up the check number scenario.
Randall
Thank you… couldn’t say any less.
Wow. If Noca is able to gain traction this will be huge. I don’t understand how they make money though. How can they secure and transfer a transaction, continue to develop new features, and pay operating costs for .25%. I just can’t see them scaling the business and charging this. If they do gain traction, I expect price increases.
@joe
Noca’s cost for Debit/ACH processing is miniscule given the scalability offered by todays “web 2.0″ technologies. In addition Noca’s aims to provide a user experience with transactional details via the user portal. That will be an additional revenue monetization source help keep rates as low as they are.
(Disclaimer: I work for Noca )
transactional detail, what’s special about that aren’t everyone providing that. paypal and others. maybe i’m missing something or you explain what you mean by transactional detail.
We are very happy with NOCA. For Klatcher, allowing bank payments with no fee attached is revolutionary. And its not just about the model, it is about one-click payment user convenience. Try it out (you don’t have to buy anything, just get to the check – its amazing): http://www.klat...mi_lisa/premium
You guys use MySQL?
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needed 0.6486s
Prefixing tables with “tbl_” is an anti-pattern, too.
yeah they must have had this written by some Russian Hasks
Agree with Jaafer. Users are only comfortable now giving their credit card numbers, and are at least protected by their credit card company in the case of problems. Giving out bank details is a different ball game, and certainly isn’t something I’d feel comfortable doing – regardless of how secure NOCA claim it is.
@Jaafer and MRK
Fraud in checks/ACH is substantionally less than fraud in credit cards. The reason is simple – credit cards don’t require “two way” identification. Doing an ACH transaction requires both transacting entities to have bank level verification as opposed to credit cards. If I have somebody’s credit card info I can commit virtually unlimited fraud. Having somebody check/bank account number doesn’t give me that ability.
As far as individual indemnification is concerned the user is indemnified by the bank and NACHA (federal govt body that regulates ACH/checks) regulations
http://en.wikip..._Clearing_House
“In accordance with the rules and regulations of ACH, no financial institution may simply issue an ACH transaction (whether it be debit or credit) towards an account without prior authorization from the account holder (known as the Receiver in ACH terminology).”
You are welcome to use credit cards. Having an easy way to pay by checks is also helpful I believe.
(Disclaimer: I work for Noca )
If you have someone’s routing and account number, you can create fake checks. That’s all there is to it. I guess with “echecks” there may be more checks and balances, but what is this two-way ID you speak of? Who is the second party, the bank or the person whose check you are trying to fake? Either way… I don’t buy at all that it’s more secure.
@Sean
The second party is the receiver. You can create as many echecks as you like but no bank will process them for you (unless they verify your identity – BSA – Banking Secrecy Act – has very stringent rules about banks ascertaining an individual or a commercial entities’ identity ) as are the bank regulations on hold requirements for funds using echecks – they are pretty rigorous in this country and almost any other country. Bottom line – you can’t cash fake echecks easily. Again no system is 100% secure but checks generally have less fraud then credit cards – you’ll seldom hear the bank equivalent of about 100 million people potentially losing their credit cards/identities from payment processors like Heartland Data Systems.
NOCA and ACH transactions don’t prevent identity theft or fraud.
@Bruce
I agree there are no absolutes. Credit cards sure don’t prevent identity theft or fraud. However ACH fraud levels are about an order of magnitude lower
@PJ
ACH transactions are a growing source of problems:
“Whereas consumers have 60 days to return unauthorized ACH entries, businesses have only 24 hours. The potential for financial loss is also greater on the business side due to higher balances retained in accounts.
@Kugutsumen
I agree with you. Our system is for consumers for now. They get 60 days to dispute any un-authorized transactions.
“Fraud in checks/ACH is substantially less than fraud in credit cards.”
@PJ: But as a consumer, I don’t worry about credit card fraud much. I tell my credit card company it wasn’t me, and now it’s the merchant’s problem. I’m not out the money. With ACH fraud, I am the one out the money until it’s resolved.
ACH fraud rates may be much lower, but as a consumer, it is ACH fraud that I am more concerned about.
Aneesh, you bring a great point and i totally agree with you.
ACH offers the same idemnity as Credit Cards expect a much longer timeframe (60 days as oppsoed 30 days) to dispute so its actually easier for the consumer to dispute. The issue is perception, consumers are used to the 800 number on the back of the credit cards and there isn’t always an 800 number on the bank statement. But this issue of “educating” the consumer is a solvable problem. We have a solution that should be scalable.
(Disclaimer: I work for Noca )
Umm…I seem to remember putting my check blank numbers (routing and account numbers) into Paypal. And paying directly from my checking account. This may be new in that you can do it without setting up an account with Paypal though. And I’m not sure if the receivers of the payment get a low rate with Paypal if they deposit into a checking account.
1. With Paypal, merchants do not get a lower rate when the customer pays w/ ACH. That’s where Paypal makes the most money on a relative percentage. And that’s also why Paypal always defaults to using a bank account when logging in to pay (requiring one to click change to switch to a credit every time).
2. Anything that can go mainstream and bring competition to the collusive practices of the giant transaction gateways and networks (VISA, MC, Discover, Amex, eCheck systems, Paypal, etc.) is a VERY GOOD thing. Right now the standard fees for all of those things are ~2.00-3.5% + ~$0.10-0.40/transaction.
3. Anything that encourages spending with actual funds, not credit, is an important cultural shift and will gain in popularity (again).
However, for NOCA to really take off, it needs to be easier and safer (how much insurance do they offer?).
["Noca will then send a text message with a code to the user’s cell phone, which needs to be inputed for the transaction to be completed."]
Is that true? That sounds like a total recipe for failure.
NOCA better do what Paypal does (in terms of banking), by at least using stored info & surrogate credentials (e.g. email address & pass) and leave it at a that. Then, for more important things like changing settings and withdrawal limits, you can get fancy w/ text msgs confirmations. At least offer e-mail confirmations or something, not everyone has a mobile phone (shocking, I know).
If you don’t make it easy for payers, that’s the kiss of death for merchants. I hope to seem them offer decent competition someday.
@JP, Using SMS for authentication is also a joke.
If you have access to the SS7 network, you can reroute and intercept any SMS easily.
I guess I don’t understand. How does a phone loop stop someone from entering another person’s banking information and stealing money that way? Really, does anyone know how it works? if it works?
It is a flat $10 fee to receive e-check payments through paypal.
I like paypal’s idea better, far simpler using just an email address…
however, I do hope they make it big, so paypal will lower their fees
“On the consumer side, Noca assures security and prevention of identity theft because the
transaction avoids credit cards and uses debit transactions instead, where the money goes
directly from the buyer’s checking/savings account to the merchant.”
I strongly disagree, debit fraud is a lot more dangerous than credit card fraud.
If you have a problem with a fraudulent charge on your credit card you can contest your bill and refuse to pay until the problem is resolved and most banks offer a zero liability policy on credit cards.
That’s not the same with debit fraud, your money is gone and It might take a long while before your bank acknowledges the fraud and refunds your money. Some banks in the US even have a cap and may only be liable for $50 or so.
I agree. Once a merchant double-charged me via ACH. I spent hours with Bank of America (various departments) and they said that they can’t do anything and I need to solve the issue with the merchant directly. The bank said that giving my account info to a merchant makes me liable for all electronic transactions and there’s nothing they can do. I tried to go the fraud route as the merchant was unwilling to expedite solving the issue, but the bank said that by their terms fraud means check fraud only.
@Nikolay
The federal government has enacted regulations to protect consumers. Tel Bank of America about Reg E (or 12 CFR 205 , http://tinyurl.com/cqykeu )
They are by law required to reverse the transaction.
(Disclaimer: I work for Noca )
I write checks all the time. Unless I’m missing something Noca is same as writing a check ? If so it seems safe to me. My check has my account number – but unless you forge my identity you can’t cash it. If you try doing an online transfer you will need to go through your bank and reveal your intention and identity. But if you steal my credit card account number and expiration you can do whatever you want. Ofcourse in both cases I am protected – in credit card by the credit card company and in case of checks by my bank. I still like the ability to occasionally write checks for some online purchases
Fplace, it isn’t the same as writing a check which is a physical medium.
Your checkbook is not linked to your e-mail address or a username and password.
I am used to paypal. Unless I misunderstood, I don’t see much differences here.
Erm… there’s a huge difference for people who accept payments…. there’s no fees
It’s interesting that they are using Ubiquity commands = nice way to help promote their site…
NO NOCA IS NOT THE NEXT PAYPAL.
WHY… IT USES CHECKS? IT HAS NO TRUE ACCOUNT TO STORE MONEY IN!?
All it is is a way for MERCHANTS to save money and make it INCONVENIENT for people like me who do a lot of purchasing.
Say NO to NOCA
@Alin
Wow, the hate..
Um, personally, I’d rather not have little piles of money lying around in PayPal accounts.. It makes a lot more sense for me to just pay from an account I actually use.
This looks pretty interesting, actually.
Next paypal with all these costs and limitations??? Yeah right.
No, it’s not “the” next Paypal. It will be a competitor for sure. Paypal is too huge to up and replace, no matter how much everyone hates them.
When PayPal started no-one used it, except for nerds doing small time stuff. There was no way anyone would use it for serious transactions. It took a long time for payPal to get accepted and even now it’s still not mainstream (not compared to Visa and Mastercard, anyway).
I hope Noca takes off because we are bring ripped off by Paypal, which is making big, big profits for a service that has low, low overheads. These guys had the chance to revolutionalise the costs of credit and payment transactions by bringing the costs down dramatically compared to offline fees, but they’ve done little more than exploit the online community and are pricing themslves on par with the offline providers. They deserve to be done.
How does ACH fraud occur?
ACH fraud can occur with little effort. An individual simply needs two pieces of information: your checking account number and your bank routing number. This information is used in various ways to initiate the fraud. In its simplest form, the perpetrator uses your bank account and routing numbers to initiate a payment for goods or to pay off debt by making a phone call and giving these numbers to the desired vendor. This same scenario could also occur with Web-based purchases.
But the merchant doesn’t receive your banking information seeing as NOCA does not provide it to their merchants. So really the only concern is if Noca is corrupt or not. Since there’s no evidence to the contrary, I’ll give them the benefit of the doubt.
The following case offers an example of business-to- consumer ACH fraud. A consumer purchased a one-year membership at a local health club, paying in full by check. After the year ended, the consumer was no longer going to the health club, but for the next three months, the club issued an ACH debit to his checking account for the monthly dues. This ACH transaction was never authorized; however, someone from the health club used the consumer’s checking account number and bank routing number to initiate the transaction.
@Kugutsumen
How is this different from the same Health Club doing the same to the purchaser if the purchaser used a credit card ? The purchaser would call the card company and dispute it. In check/ACH the purchaser would call the bank and dispute it. Identical procedure.
You made the claim that with ACH transaction it is harder to commit fraud, this example shows that it isn’t. There are thousands of other examples.
According to US regulation, the victim may still be liable to a maximum of 50$ for each transaction or more if he failed to notice the fraud within 60 days.
If he was using a credit card, he wouldn’t be liable for anything.
@Kugutsumen
If the victim uses Credit Card and report fraud then they can be liable for a maximum of $50
Check out the regulations for credit card established by the government. Either using ACH or using Credit Card the consumer is protected (if they report the fraud) to paying a maximum of $50
I’ll stay with PayPal
This already exists in Holland. iDeal is a system that all ecommerce sites use that allows instant payment from your checking account via an RSA token and your ATM card. All the major banks support iDeal. Its the standard way to pay in a country where most people don’t use credit cards very often, and it works very well.
(linkback) Thrive or Fail? Noca – cheaper paypal competitor that only uses checking accounts [VOTE] – http://www.thri...rfail.com/9afef
Too much risk guys! You don’t have a clue yet, but the customer can use it and deny payment afterwards because you cannot prove the phone you sent the code has nothing to do with the bank account’s owner, in fact is like any e-check system, any person that has the account numbers and a phone can fake it!!!
Three simple words: Noca gets it.
Noca is based on the principles of networked economy. It cuts out the middle man. Its competitors charge the ridiculous fees just because they can, and this is bound to bite them in the ass sooner or later. The days of being able to screw your customers because they have no other place to go are over.
Sure there will be challenges, but in every adversity is hidden a seed of opportunity. Noca is on the right path and it will blow its dinosaur competitors out of water.
Give them some time and wish them well. Anything’s possible!
1) Noca is claiming to be a B2C company
- But it seems all the accommodations are being made on the B2B side (i.e. lower processing fees)
2) The consumer is forced to enter ABA/acct# (larger headache than credit card #) and is not offered the same pruchase protections as credit OR debit
3) Noca competes with standard debit card purchases in that debit also directly removed from DDAs
4) Using SMS for out_of_band authorization is only more secure as long as is in use minimally. It will become an attack vector once it’s in widespread use
Not sure I buy the “gets it” b/c their go-to-market seems highly flawed. I admit they get the transaction processing ecosystem, but they should b/c their team consists of veterans from that industry. Noca has very weak value proposition to the consumer, imo.
@coldbrew
Your assertions are mostly right but remember you are commenting from what Noca has today. A lot of problems you cite can be solved with some creativity. It will be interesting to see how these guys tackle some of these issues. I spoke with one of their principals and it seemed there were aware of the issues you cite.
Time will tell I guess.
I trust PayPal because it’s mature and stable. The whole reason I use it is to avoid exposing my information to start-ups like Noca.
I’m all for innovation and trying new things, but not with financial information.
i dont think i will use this service instead of paypal.maybe i will give it a shot just to see if any new features are there.
will it allow Bangladesh ???
Paypal..surorisingly does not allow some country..
“At this time, we are only able to register businesses with US bank accounts. For more information about Noca’s international rollout, please sign up here.”
I am from South Asia and I found this message at Noca website. If they really want to challenge Paypal then they should try to go very quickly to the countries that are still not under the radar of Paypal.
“Can Noca give PayPal a run for its money?”
Google checkout could. I don’t think Noca can’t.
The grill was hot about 13 years ago when Clickbank and paypal started up. You can’t strike a year after the BBQ, you have to implement your strategy when the opportunity is there.
This whole past 5 years of startups has just been business after business that was too little too late.
The time has come to move exclusively to mobiles now and businesses still don’t get it.
Bankers make very bad technology investors.
“I don’t think Noca can’t.”
should read
I don’t think Noca can.
http://picasawe...824755813983426
This is the type of ROI I get. I won’t show my real picks anymore, so here is a penny loser I got based off of some random website I googled.
My real picks did almost as well. This is where the money is at today. Not in startups. If you created a hedge fund and invested today you would be so freaking rich.
A year ago when this startup got it’s tear sheet that wasn’t the case. Startups in the .com era used to get 10,000% ROI. That doesn’t happen anymore. Startups tie up so much money that when there is an investment of opportunity you are no longer free to pursue it.
I don’t see any of these non-mobile startups working that TC is reviewing. I see really good startups coming later this year and all on mobile platforms.
Especially not a paypal clone.
If your startup can beat this ROI get a hold of me.
http://finance....JAVA&ntsp=0
I’m serious. I just want to see the summary and the 1y projection. Send it to me at my domain name at gmail.com
America runs on credit..not on the checking account! This startup is doomed from the start!
at .25 cents per transaction who needs Paypal?
Its 0.25% not $0.25 per transaction and no fixed fees per transaction. That would mean a charge of $0.025 for a $10 transaction. Not bad – 2-3 pennies for a $10 ticket.
I take a lot of payments online and I would be happy to stop using paypal. I’ve been using them for 10 years and they still do stupid shit. My account is currently locked while they perform a ‘random security screen’. I have to wait a week before I can pull funds out.
Anyway I’m not going to use a system that won’t let me pay with credit cards and I’m not going to risk losing customers by only letting them pay with a bank account.
Sorry I just don’t see this taking off.
Is it not possible to integrate multiple payment options?
@PJ & IG
As a developer I’ll be pulling for you to succeed. Many, many businesses will be on your side, because it truly is ridiculous how much of a cut the middle-man pay processor takes out of the transaction. It’s a problem I thought about trying to solve myself. A few tips:
1. Pay attention to some of the valid concerns commented on so far – giving financial info involves trust of consumer; it matters little how safe *you* feel it is.
2. It’s got to be convenient. PayPal gets this. I agree with you that ACH over credit is the way to go, but you need to do it the way PayPal does (e-check pay from your bank). Have customers directed to the *nova* site to initiate payment, that part should be totally out of the merchants hands. People set up an account with you (mostly maintaining $0 balance like I do with PayPal) and you verify their bank account with tiny ACH credit amounts. Then you’re off and running.
3. The only way to avoid #2 is go directly to banks and get enough of them signed up with a secure procedure for client verification, as someone above mentioned about in Holland.
PayPal actually ate the cost and lost money on many transactions early on knowing full well that eventually moving money around conveniently would be profitable – and that still holds true. Best of luck.
Yeah, my feeling is that the SMS thing needs to be eliminated, and right now as it stands, it’s not a real PP competitor.
This is Great. Once again good job TC. Keep us informed on the latest and the greatest.
I hope they do gain traction; PayPal has been okay, but super clunky and expensive. There is plenty of room for more elegant, affordable options.
Adding a CC as an option to the end user of a DC would be nice. At least as an option. Thus the best of both worlds.
I did a post on “noca” this morning “Sorry Noca…NoCanDo talking about the fact that this doesn’t sound like anything that PayPal has to worry about. http://pindebit...ocanocando.html
ACH does not protect against merchants who fail to deliver merchandise (non-delivery chargebacks) and merchants who ship low quality goods (not-as-described chargebacks).
What about the 1% cashback and airline miles my current CC gives me?
I’ll use my CC until someone comes up with a truly compelling alternative.
Noca is another echeck payments company. PayPal, Google Checkout, and Amazon Payments all have echeck as part of their offering and Revolution Money Exchange is an echeck service with a stored value account attached, as are Obopay and other mobile payment companies. Yes there are subtle differences between these but they are all using ACH.
I’m not comfortable putting my checking information on a non-secure app in facebook. I like mpayy’s solution where you just link your already setup account (mpayy.com)
Cool company, but this is going to be HARD! {seesmic_video:{”url_thumbnail”:{”value”:”http://t.seesmic.com/thumbnail/2GzXP0jHQp_th1.jpg”}”title”:{”value”:”Cool company, but this is going to be HARD! ”}”videoUri”:{”value”:”http://www.seesmic.com/video/nfsyr7umOf”}}}
Really??? Another pay by check provider is news? The only people they are convincing are the ones blogging about them.
This reminds me of a company called “DebitMan”, which had very low ACH fees that appealed to large brick and mortar merchant. They had a terminal that would create a debit card from a check on the spot. They landed some very impressive clients like WalMart and Walgreens. Not sure what happened to them, but their fees were so low that they needed to get Paypal scale to be profitable.
Anyone know what happened to Debitman?
Debitman is now rebranded as Tempo Systems. They are in the decoupled debit space at the moment.
Wooow,
It always amazes me how OLD the US Banking system is. In Europe nobody uses a check anyways any more for years and systems like this are standard. This shows what we have in the US, a much to old banking system with no security for customers. Only the big guys win, always!
Also check Zaypay, which may be small, but has a lot of potential and is already connected in a lot of countries. http://www.zaypay.com
It’s not the same as Noca, but it sure marks the upcoming new methods of micro-payments for apps within social networks.
When they let me use my verisign keyfob for an extra step of identification, I might give them a try. Honestly, though, giving out my account & routing numbers is way riskier than a credit card, which takes 1 minute to cancel and can cancel transactions you didn’t make.
Click the security seal. It comes up invalid. Looka t the bad grammar. Look at all the invalid links.
Looks like a scam site to this merchant.
No way will I be giving them my company bank account info. No way.
We did a new site rollout yesterday and during the release there were some temporary glitches. It was fixed in about an hour. Should be fine now
(Disclaimer: I work for Noca)
Its never safe take this kind of info in apps and mostly the onlines
https://revolut...eyexchange.com/ is the same thing, but FREE.
Revolution money just looks like a different kind of credit card – so I’d skip it and stay with the credit card already in your wallet.
More than price, I care about payment security, and for that I like OpenCuro because you pay using non-static payment codes and the payments don’t contain any personal information.
Another payment system that isn’t as secure, but is pretty cool is Obopay – which lets you can pay with your cell phone.
Test
I admire the fact that these guys want to start such an ambitious business.
That said, I know the owners know this, but getting this business up and running will be a chicken and egg problem. Merchants won’t wanna sign up unless they know ppl will be using it.. ordinary ppl won’t be using it unless a ton of merchants accept it.
Paypal solved this problem by going to bed with eBay. People needed an easy way to pay for stuff they won with auctions.. how are they gonna do that? by mailing a check? No.. by mailing hard cold cash? No.. (altho I used to do this). Somehow this startup needs to solve this chicken and egg problem by having incredible, compelling value propositions for BOTH merchants and consumer… and quite honestly, as a Paypal consumer, I’m quite happy with it. I’m sure merchants and sellers do, ’cause Paypal gets a huge cut, but as a buyer, I’m quite happy.
So yeah, solve that chicken and egg problem, and you got yourself something… I dunno, maybe give out free stuff to the first users? do a PR stunt and have ur mascot dance naked in front of Times Square? wait.. n/m ,bad idea
have you heard about
http://www.healthyandcool.com their concept is pretty cool, I think they are still working on their website though…