A Consumer Scared Of Using A Credit Card? A Walk-In Alternative, With A Fee

Plastic payment is not the most attractive option for all consumers. There are those without credit cards or bank accounts, but much more often, there are those consumers who don't like turning over that much power to any retailer. Will they charge more than they should? Will the consumer get locked into recurring charges? Could the data get stolen and result in many unauthorized—and time-consuming—charges? There's a mini-trend of companies pushing for alternatives, often with walk-in and fee options.

In March, Western Union cut a deal with Amazon to let the E-Commerce giant's customers use the 44,000 Western Union locations with fees ranging from $3 to $8. Then Bank of America and Citi got into the act with a one-time use card, another tactic to make sure the payment is only used for the immediate purchase price and nothing else.

Last Thursday (Sept. 3), eBillMe offered its version, where the payment company is working with MoneyGram—and others—to offer cash-only options at about 75,000 walk-in locations, for a $5 fee. The offer differs from the Amazon/Western Union in that it focuses on direct online payment for something specific while the Amazon program offers a gift card for an unspecified future purchase. Also, the fees are somewhat different, although they're close.

The eBillMe programs add one additional layer of effort for participating retailers—including Buy.com, Sears, Crutchfield and TigerDirect—in the form of a delay. After a consumer puts the item into their shopping cart, they have the option to select EBillMe from the payment choices. If they make that choice, the item is on hold until the consumer can get to a payment location and pay for the item plus the $5 fee.

An eBillMe spokesperson said placing the orders into a "pending state" is really not that big a deal for most large retailers. "There are actually many circumstances that require merchants to put orders into a ‘pending state,’ so it’s not just unique to eBillme. For example, orders processed with credit cards that go into manual order review are in a pending state," E-mailed Alicia Buonanno, who works for a PR firm retained by eBillMe. "Orders also go into a pending state all the time when merchants run out of stock (as they don’t reserve inventory) and place orders on back order. Merchants who have multi-channel sales, call center or catalog, have their order management systems place orders in a pending state if payment is made by check, etc. The reasons could vary, but order management systems by and large have this capability and merchants leverage that feature of their OMS all the time."

That's a very fair point. But the bigger issue is whether consumers will actually do this. It seems to contradict the attraction of E-Commerce if they have to process the order online and then get the cash and drive over to a payment location and then pay a fee on top of it. If the consumers are so motivated, why not drive to the store directly and save themselves the online typing as well as the $5 fee?

There are several answers. First, the desired item might only be available from a store that doesn't have a nearby location. Depending on the location of the payment office, it might take a lot less time waiting in the line there than waiting in the retailer's line. They also don't need to hunt the retailer's aisles to find the item.

The people at eBillMe were pushing the idea of the unbanked, which is a legitimate but small population. Much more attractive—although less politically acceptable to reference—are those consumers who don't trust the retailer. Last week, for example, I personally received an interesting offer in the mail consisting of a giftcard of sorts. It would have given me $300 to use for an interesting marketing service. 'Twas tempted, but the service vendor's site offered no way to stop charges as soon as the credits ran out. The "try us for free" could have easily cost several thousand dollars if we didn't monitor the service 24x7. Shades of the old AOL, where a free deal pulls a consumer in, who then finds it very difficult to end the service and stop the charges.

Those are the situations where the pay-cash-in-person or one-time use cards make sense. But that's hardly a selling point for merchants.

The success or failure of these programs will reveal a lot about how much consumers are willing to pay—in time and cash. Put even more bluntly, we'll soon find out how much they really distrust retailers.