When making a purchase online, there are a variety of methods that can be used to complete a payment transaction.  Two of the most common used are credit and third party billing to a telephone bill.  These two methods are similar in some aspects but vary in several.

Applying a purchase to a phone bill works similarly to credit card transactions in that the customer chooses the bill to phone payment option then is prompted to enter their telephone data much in the same way credit card information is entered to be verified and accepted.  There is information obtained that is unique to the bill subscriber that is used strictly for verification purposes.  The information is then communicated from the merchant over a secure gateway to a processor, or third party biller (also known as third party clearinghouse). Next, the data is authenticated by the processor or clearinghouse.  Once the identifier information is authenticated, the clearinghouse sends confirmation back to the merchant.  The merchant then sends the EMI record for billing to the clearinghouse for processing.  The clearinghouse in turn sends the EMI record to the Local Exchange Carrier (LEC) for inclusion in the next billing cycle. The LEC is responsible to remit payments received less processing fees to the clearinghouse, which then is remitted by the clearinghouse to the merchant, much like credit card payment flow as follows (courtesy of Bank of America).

Credit Card Flow (courtesy of Bank of America)

In the credit card world, the flow of information and money between the merchant, the acquirer, card association and issuer is known as the interchange, and it consists of a few steps:

Authorization

The cardholder pays for the purchase and the merchant submits the transaction to the acquirer. The acquirer verifies with the issuer—almost instantly—that the card number and transaction amount are both valid, and then processes the transaction for the cardholder.

Batching

After the transaction is authorized it is then stored in a batch, which the merchant sends to the acquirer later to receive payment (usually at the end of the day).

Clearing and settlement

The acquirer sends the transactions in the batch through the card association, which debits the issuers for payment and credits the acquirer. In effect, the issuers pay the acquirer for the transactions.

Funding

Once the acquirer has been paid, the merchant receives payment. The amount the merchant receives is equal to the transaction amount minus the discount rate, which is the fee the merchant pays the acquirer for processing the transaction.

Bill to Phone Method

The bill to phone method is different from credit card purchases in that the consumer is not offered a credit line, but has the ability to charge services to their home phone bill by the phone company.  Payment in full is due during the next billing cycle. In general, with this form of payment merchants are not paid until the consumer pays the bill.  However, there are instances and companies that forward monies to the merchant upon receipt of the bill in expectance of compliance by the subscriber, which is direct billing.

There are benefits to applying a purchase price to an existing telecommunications account.  Being that the account is already established, minimal identifier information is necessary to complete the transaction.  This means that your credit information is still safe and secure and not across the internet for the public to see.  Let’s face it; the internet is not the most secure place to display personal information.  This method of alternative payment is not only more secure, it is easy to do.  The ease of use coupled with the security is what sets this method apart from credit card transactions.

BOKU - Pay by Mobile

Alternative payment methods (APM) seem to be taking off these days.  In addition to ILD’s recently announced growth of its pay by phone service, it looks like BOKU is experiencing much of the same on the mobile side.  As trends continue to show that online credit card transactions are decreasing and the growth that gaming companies are experiencing, alternate payment options are increasing in demand.  Social networks and gaming sites have now become a world-wide phenomenon and offering a convenient form of payment without asking for a credit card creates simplicity and ease for the user. 

BOKU allows merchants that sell digital goods, have the consumer pay by adding the charges to their cell phone bill (the same service ILD provides for home phone bills).  Once you enter your phone number BOKU sends a text to the phone to acknowledge and accept the charge.  It’s much easier to enter your phone number than getting your credit card, entering the whole number, the security code, address, etc. Also, for a small transaction of less than $10 in many cases for games, it’s just easier to add that charge to your phone bill, rather than your credit card.  Here’s the recent BOKU announcement: http://www.marketwire.com/press-release/Boku-1038160.html. View how BOKU works here: http://www.youtube.com/watch?v=mayQZvbTLUw&feature=PlayList&p=2514267C311EB75A&index=0

For more information on ILD Teleservices simple bill to phone payment option for merchants, contact us at www.ildteleservices.com.

Inc. magazine’s annual ranking of the 5000 fastest-growing private companies in the country was announced and ILD made it!  The Inc. 5000 is the most comprehensive look at the most important segment of the economy — America’s independent-minded entrepreneurs. Taken as a whole, these companies represent the backbone of the U.S. economy.  So, it’s exciting to announce that ILD Telecommunications earned a place on this prestigious 2009 Inc. 5000 list, celebrating the fastest-growing private companies in America. ILD Telecommunications ranked 4,675 nationwide, 232 in Florida, 16 in Northeast Florida.

Consider for a moment that according to statistics from the US Census, there are over 6 million employee businesses in the United States, and ILD Telecommunications came in at #4,675!   Outstanding!  Congratulations everyone at ILD for making this happen!  For more about the Inc. 5000 list, click here.  To see why ILD made the list, click here.

The ILD booth continued to see large amounts of traffic on Tuesday and Wednesday. We were excited to see some of our existing customers and phone company vendors like Verizon. It was great to educate people stopping by on alternative phone billing and adding the Bill to Phone option to their checkout process. Attendees learned about our new site www.ildteleservices.com, a convenient way for people with problems to resolve them. As we walked around the conference floor it was amazing to see how many people would Tweet or would be looking at something on their cell phone. We also had several Matthew Lesoko sightings (the exuberant guy who wears question mark suits) on Tuesday. As the conference comes to an end we would like to thank everyone who stopped by ILD Teleservices in booth 222 and helped to make our trip to Boston a great experience.