Field Narrows For Web Payment Options

31 August 2001
A trio of alternative e-commerce payment solutions closed their doors recently.

The news comes at a time when online gaming operators are struggling to get in compliance with rules and regulations set forth by credit card companies.

Within the last two weeks, and, both of which offered alternative e-cash payment solutions, closed. Another site,, is shutting down Friday.

All three sites are based on the same basic principal: They offered a cash-like currency that could be used on the Web. Beenz and Flooz were both designed to sign up affiliate sites where their "currency" could be used. The flaw in the business plan was that there was no backup plan for when many of the affiliate online retailers went out of business, a common occurrence within the last year.

Cybergold was a little different in the sense that the commodity could be bought and then used on affiliate sites, but the value of the gold could also be cashed out at any time by the customer.

Peter Hartsbook, the marketing director for Cybergold, said the fault with its business plan wasn't so much its target audience as it was where the company fell in the grand scheme of things.

"Our parent company was bought out by Yaga last year," he said. "It was decided then that some aspects of the company would be turned over to Magna Cash and we would focus on building the Cybergold brand. The problem was there were just too many options out there and not enough suitors. We quickly realized how far down on the food chain we were and closing down was the only option that made any sense."

Kenneth Bob, the CEO of Safewww Inc., a company that specializes in software to cut down on credit card fraud, said many of the alternative payment options on the Web that have closed down recently missed the target with their product.

"I don't think most of them did a very good job of finding their niche," he said. "A lot of the sites were there, but the people really didn't need it.

It goes back to the whole 'it is nice to know it is there, but there is really no need for it.'"

Those kinds of comments seem interesting to those in the gaming industry who have been trying to find a legitimate payment solution to avoid hassles with credit card companies that are not fond of Internet gambling charges.

Bob said there are a handful of gaming-related sites that were participating in the Cybergold system but not enough to keep the plan afloat.

Stephen Fein, who specializes in credit cards and other payment plans for the gaming industry at Signature Card Services, agreed with Bob that the flaw in most of the systems like Flooz and Beenz was their lack of targeted marketing to consumers.

"It is nice to have Whoopi Goldberg as your spokesperson, but if your sites are all going under there is nowhere for people to use the currency," he said.

While alternative payment solutions for Web retailers continue to struggle to survive, online gaming operators are grasping for a way to accommodate both their customers and banks. No one is quite sure what the solution is.

"The best alternative is probably something in between what Flooz and Beenz offered and what companies like Surefire offer," Fein said, referring to a company that offers transaction processing for the gaming industry.

Bob, meanwhile, feels his company's recent partnership with ClearPay, the payment processing company that allows users to secure an online account that they can fill directly from their checking account, offers both security and functionality.

"We feel ClearPay is the most viable alternative right now," he said. "It is basically an online checking account that can be used anywhere with plenty of fraud protection."

Nobody knows where Kevin Smith came from. He simply showed up one day and started writing articles for IGN. We liked him, so we decided to keep him. We think you'll like him too. Kevin can be reached at