Stellar Start-Ups: eBiz Mobility: Banking on the unbanked

The CEO of Israeli startup eBiz Mobility, seeks to help people who are excluded from Web shopping because of trust issues.

Jeremy Kagan 88 248 (photo credit: Courtesy)
Jeremy Kagan 88 248
(photo credit: Courtesy)
It comes down to trust, says Jeremy Kagan, CEO of Israeli startup eBiz Mobility ( If everyone just trusted each other, the wheels of international commerce would get greased and billions of people would spend trillions of dollars on great online services. How's that for a recession-buster? Alas, trust is hard to come by - and for good reason. We live in a cold, cold world: a world where you have to "put up or shut up." If you don't have someone trustworthy vouching for you, your money's no good online - literally. And for those who don't have a credit card or other internationally recognized means of payment, "on line shopping" means waiting in a queue at their local supermarket. For many merchants, you're nobody if you don't have a credit card; if you didn't have the "juice" to get one out of your bank, you obviously can't be trusted! But those financial nonentities - the "unbanked," in current business parlance - make up a mighty population. Forget about the third world; in the United States, 40 percent of people who regularly surf the Web don't have credit card. (One study shows that as many 80 million don't even have bank accounts!) Outside the US, the situation is even more dire; even in some advanced countries, as many as 90% of those who surf the Web regularly don't have credit cards. It's a "dire" situation, all right: for the surfers, who are forced to ogle Internet goodies, like downloads, music, ring tones and all sorts of other stuff they can easily pay for but can't because they don't have an easy way to pay for them; and certainly for the merchants, who could be doubling, tripling or quadrupling their business with access to the Great Unbanked. Even more dire for Web merchants is the "dropout rate": 60% of people who seem ready to make a Web purchase abandon their shopping cart before the transaction is completed! "At least some of these are people who were going to buy but realized they had payment issues," says Kagan. His company seeks to help these people, the ones who are excluded from the wonderful world of Web shopping because of trust issues but really would make good customers. eBiz has developed a payment-clearing system that enables merchants to feel secure that they will get paid without having to pay expensive premiums to billing-service providers. It enables sites or cellphone-service providers to grab a piece of the business that passes through their network, and it allows hundreds of millions of Web surfers who would otherwise be locked out of Internet commerce the opportunity to purchase digital contents and products that will make their lives easier and happier! Just who are these "unbanked?" Among Web surfers, of course, many are teenagers: too young to qualify for credit cards but old enough to have cellphones. Many of them already download content from their service provider and the latter's partners. Kagan's system allows even smaller merchants to join that golden circle and reach the service provider's customers. Another large group of the unbanked consist of foreign workers who are living and earning money in western countries but don't even have a bank account. Some don't even have cellphones but they do surf the Web, and they have money; for them, eBiz can enable purchases via virtual credit cards or credits at their ISPs. Merchants that enroll in the company's OneTouch ( payment program get access to billing deals eBiz has worked out with various service providers or credit organizations. Among those are cellphone-service providers, for example. Customers who purchase at a Web site that accepts OneTouch will be able to pay with their cellphone account, with the charge just added on to their bill at the end of the month. But eBiz offers merchants other methods of collecting payment. The company just signed a deal with Ukash (, a prepaid credit card that UK customers can buy and use online. And merchants can even enroll in credit programs offered by ISPs or telcos, where customer purchases are added to those bills as well. So why can't merchants join programs like these on their own? They can, says Kagan, but it just wouldn't be worth their while. "As all cellphone users know, you can purchase all sorts of services and downloads via SMS," he says. "But third-party merchants find that solution very expensive, because service providers charge a high premium for each message, not to mention disputes and fines on the amount that was sold, among other issues. The same holds true for credit-card commissions and penalties. If you're selling a download for a dollar or two, it just doesn't pay." The same goes for service providers. Due to limited resources, they can only work with partners they know and trust, leaving "off-portal" and small merchants out of the loop. But they will work with eBiz, which vouches for the merchants enrolled in OneTouch to the "big guys." It's a beautiful relationship all around! With OneTouch, Kagan says, even small merchants can take advantage of online payments, because it's eBiz that's handling the transaction with the service provider. Meanwhile, the merchant is assured that the customer will pay, since the payment is being collected by the service provider - and the merchant gets a check from eBiz. The service can even help customers who have credit cards. Businesses that offer OneTouch can be assumed to be legitimate, since they are approved by the service provider and eBiz. So there's no need to fear online fraud or phishing at a site that accepts OneTouch. Trust is important, says Kagan, and offering merchants, service providers and Web surfers the ability to connect with, do business with and trust each other is what eBiz Mobility is all about.