After five years of programming and promoting, Ray Grace of Sherwood Park is processing millions of dollars per month in Internet-based retail transactions -- and aggravating the big banks.

Grace is both the owner of GPay and the CFO of UseMyBank Services Inc., which lets consumers buy goods and services, or make charitable contributions, on the Internet.

UseMyBank each month carries tens of thousands of transactions for which GPay handles the financial settlements.

The service uses ATM cards and appeals to Internet shoppers who can't or won't use credit cards.

"Thirty per cent of people do not have credit cards," Grace said. "And many of the 70 per cent do not want to give out their credit card information."

Many merchants are frustrated by delays of one to three days before credit-card purchases are credited to their bank accounts, he added. "I saw the need for instantaneous payments, instantly recorded, convenient and cheap."

UseMyBank and GPay enable cash transfers, with the merchant receiving the proceeds in an instant.

"No one else offers this," Grace said. "We have no competitors."

Payments can be transferred from all five of the major Canadian banks to 700 participating merchants and charities in Canada and the United States.

UseMyBank is concentrating on recruiting more merchants, said president Joseph Iuso in Toronto.

Completing an Internet-based purchase through UseMyBank takes seven steps, compared with 14 steps for a credit-card purchase, Grace said. "You are e-mailed a receipt automatically and the merchant is advised immediately."

Merchants appreciate the immediate receipt of funds and notification, plus the access to customers who don't use credit cards, he said.

The Princess Margaret Hospital Foundation in Toronto started accepting charitable donations through UseMyBank more than a year ago.

"We wanted to offer our donors as many options as possible," said Richard Cadieux, the foundation's executive director.

It receives about 40 donations a month through UseMyBank, mostly from people who are not comfortable using credit cards for electronic transactions, Cadieux says. "It has run smoothly."

Merchants pay UseMyBank 1.5 to 2.5 per cent of the amount of each purchase. The CIBC and TD impose surcharges of $1.50 for a UseMyBank transaction.

The service requires the consumer to enter an ATM card number and an online banking password.

"That information is not saved or recorded," Grace said. "We have had thousands of payments and no customer complaints."

Chartered banks, however, discourage clients from using the service.

"We do not endorse the practice of asking for personal identification or log-in numbers from our clients," said RBC spokeswoman Baya Rodeck.

"It goes contrary to our online banking agreements, which state that you cannot share your online banking information."

She was not aware of any problems with UseMyBank but cautioned that "clients who do release online banking information would be responsible for any losses if something were to go wrong."

Similarly, at TDCanadaTrust, "as long as they ask for customers' ID and passwords we don't want any part of that," said spokesman Jeff Keay. "I am not questioning the reputation of UseMyBank," he said, "but we don't know their security practices."

Grace said he tried to negotiate working arrangements with the banks and now relies on building trust with customers and participating merchants.

TDCanada Trust may soon compete against UseMyBank, Keay said. "We are working to develop such a service."

"That prospect doesn't concern Grace. "We are two years ahead of anybody else," he said. "Our product is in place, it's proven, our clients and their customers are happy."

UseMyBank is aiming to expand its presence in the United States and Europe by signing a breakthrough deal with a major airline.

© Copyright 2004 Edmonton Journal