It was interesting to read the "The Morning After" article in the June 26, 2010, issue of the Economist, which talked about the recent bloating of personal debt levels.
According to the article, household debt approached 100% of GDP in 2007, a level only seen once before, back in 1929 during the onset of the Great Depression.
The article explains that America is not alone in embarking on this debt spree as Britain household debt rose from 105% of disposable income in 2000, to a whopping 160% in 2008.
And in Spain the ration rose from 69% to 130% over the same period.
You might be asking "what does this have to do with making online payments and the online payments industry?"
Over the past decade consumers have become tapped out on credit spending. In plain English it means people (in the US, UK and in many European countries) have spent far too much on their credit cards. They spent more than they could afford to and the hen has now come home to roost.
Many online payment services provide the convenience of using a credit card to facilitate online purchases.
On the surface, this seems like a convenience. But this convenience does come with a dark, underlying cost that many people might have overlooked.
The ability to pay with credit card results in impluse purchases behavior, and the ability to pay with credit card online (or offline) results in over spending, which in turn results in some people getting deeper and deeper in debt.
With CashSender, all payments are made with funds from your bank account. CashSender does not facilitate credit card payments for another good reason: The costs of credit related fraud and chargebacks would have to be passed on to website users by way of higher fees.
Our mantra is to offer the lowest fees possible, and if we were allowing credit card payments, we simply couldn't offer the rock bottom fees for which we are known.
A major shift is underway with consumers looking to save and economize as much as possible. The ability to make each dollar stretch a bit further is become a key factor when consumers compare goods and services.
At CashSender, we reaching to help online payers meet this objective in providing the lowest fees possible. And the removal of credit cards from our business model is one of the main driving forces that helps us help you.
Henry Tenby, founder