Mazooma Inc.

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The current economy is leading many consumers to cut spending and eliminate debt. One aspect of that is that many consumers are avoiding incurring a balance on their credit cards. So what is a budget-minded consumer to do if they wish to make online purchases and avoid using their credit cards?

Several new services have launched recently to allow alternative payment methods. One such startup is Miami-based Mazooma Inc. Mazooma, with its 12 employees, is part of the Centinel platform managed by CardinalCommerce Corp. CardinalCommerce allows client merchants the ability to easily adopt new payment methods like the one offered by Mazooma.

Consumers can take advantage of Mazooma by simply clicking on a tag line that asks if they would like to pay directly from their bank account. They then need to complete information such as their name, date of birth, and address, and then will have to create a password. For merchants the process can be a little more complicated as they have to integrate the application, which can take several hours.

Currently Mazooma has connections to 14 major banks, which means they have access to the majority of banks that consumers will be using. Mazooma has no formal ties to the banks though and instead uses consumer log-in credentials to initiate an automated session with the chosen bank program to verify availability of funds and to confirm the identity of the consumer. Kelly says that Mazooma’s servers do not store the credentials and as such there is nothing to breach. Basically, Mazooma is more appropriate for instant online transactions rather than recurring bill payments. A drawback to the “intelligent agent” model is that while it makes for a seamless purchase, it also could cause concern for consumers worried about malware and fraudulent activity.

The market for credit-alternative payment methods is getting more crowded in the current economy. Noca Inc., recently released their service which relies on the ACH network to allow payment and Amazon.com Inc. is now offering a commercial version of their Flexible Payments Service. Now all of these companies must work to help consumers understand the options available to them. “From a branding and behavior-change perspective, it’s going to be difficult in the early going,” says Bruce Cundiff, of Javelin Strategy & Research.