Petco using I4 Commerce's signature payment program

A Timonium startup has struck a deal with the nation's second- largest pet supplies retailer.

I4 Commerce Inc., which offers technology that gives Internet consumers the old-fashioned option of being billed for their purchases instead of supplying their credit card information, said yesterday Petco Animal Supplies Inc. has launched I4's signature payment program for purchases on Petco's online division, Petco.com.

Called Bill Me Later, the service provides an instant form of credit for online and telephone purchases so that consumers do not have to use a personal credit card.

You can walk into any Petco and use cash or a credit card, but until Bill Me Later came along the only choice on Petco.com was a credit card, said Mark Lavelle, I4's vice president of business development.

I4's system is easy to use.

When consumers log onto a partnering Web site or call into a partnering customer center, they are given the option of using Bill Me Later. Instead of punching in their credit card number, they enter their birth date and the last four digits of their Social Security number.

An instant credit check approves those with good credit, the product is shipped and the customer receives a bill within 14 days. The bill can be paid in full within 25 days - in which case there is no interest charge - or in part, just like a credit card bill.

I4 Commerce charges consumers 17.9 percent interest on unpaid balances.

The company also makes money by charging merchants a transaction fee, which, compared to traditional credit card fees, is a bargain. I4 Commerce charges merchants a fee of 1.5 percent of the order plus 15 cents for each transaction, compared to the standard 2 percent to 2.7 percent charged by credit cards companies.

Lavelle would not comment on how much revenue I4, which is privately held, hopes to generate through its partnership with Petco. The $1.65 billion pet supplier does not distinguish between its Internet and in-store sales but Shawn Underwood, a Petco spokesman, said online sales are growing faster than at the company's 680 stores.

1-800-Flowers.com Inc., another I4 Commerce partner, reported $263 million in online sales for its fiscal year 2004, an increase of 16 percent over the year before.

Forrester Research Inc. analysts recommend the system to retailers looking to increase their online sales by appealing to internet newcomers and differentiating a shopper's experience.

A recent Forrester report said merchants like Bill Me Later because it is cheaper than traditional credit cards, is relatively easy to implement and has a low rate of fraud.

Jeweler and home furnishing retailer Ross-Simons in Rhode Island started using the system on its Web site and at its call center in 2003. According to the Forrester report, the new payment option increased the company's new customer base by between 3 percent and 7 percent and upped the average order value by 8 percent to 11 percent.

As the drive to expand shopping options grows, so does I4 Commerce's.

Founded in 2000 by a group of credit card industry veterans, the company has more than doubled its work force from 25 to about 60. It expects to add 15 new merchants to its list of 25 clients, which includes Hotels.com, prior to the holiday season.

Earlier this month, the company signed on America West Airlines, which will promote the payment feature by offering its customers deferred payment on tickets for 90 days.

We are literally almost doubling the network every quarter or so and that continues to escalate, said Lavelle.

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