Canadian e-commerce eMerges out of Internet World

Valu-Net International Ltd., Lasso Communications Inc., INEX Corp. and Citibank Canada announced at Internet World in Toronto last month they have formed the eMerge Alliance — a bundled e-commerce service geared to small and medium-sized businesses.

The eMerge services will be offered mainly through ISPs with no charge to the ISP itself, said David Lucatch, president of Valu-Net.

“eMerge offers ISPs the ability to create, host and maintain turnkey electronic stores,” said Alex Barrotti, CEO of INEX. “Merchants use a browser-based e-commerce application to set up and manage on-line business.”

The bundled offering includes: banking and credit card transaction management by Citibank Canada; a secure payment gateway as well as Internet portals by Valu-Net; further marketing, both on-line and traditional, from Lasso under its NetMerchant brand; and e-commerce applications and technology by INEX. Officials from the companies stressed that this offering is for real on-line purchasing, not just brochure pages with a phone number.

Edward Moffat, assistant vice-president of business development for Citibank Canada, said Citibank will not ask for large security bonds. He said the bank gets part of the flat fee against each transaction and that merchants do not have to change their accounts to Citibank.

“We’d like it if they did,” Moffat said, “but they don’t have to. You can just do your credit card with us and, at the end of each day, we’ll transfer funds to your other bank account with no service fee.”

Moffat also pointed out that merchants can provide customers with a choice of 29 different currencies so customers can better sense how much they’re spending in a currency they’re familiar with. Billing can then be done in that currency.

“The merchant is responsible for tracking conversions,” Moffat said. “It’s a bit of work, depending on how committed they are.”

Merchants will pay a $500 initial fee that Lucatch said goes towards processing fees for things such as listings in search engines and activating credit card systems. After that, merchants pay a monthly fee based on how many stock keeping units (SKUs) they list on their site — ranging from $275 for 25 SKUs to $500 for 500 SKUs — plus $0.70 per transaction.

Revenues will be split among the four eMerge Alliance members, with Valu-Net taking the biggest share and Citibank, the smallest.

Lucatch said ISPs could make money from the service through special promotions and custom-branded portal applications, but ISPs will have it largely as a value-add for customers they don’t have to manage themselves. He said the 45 ISPs currently signed up on Valu-Net’s other projects are eager to offer the eMerge services as well.

Jackie Green, president and CEO of Beeline Communications Inc. in Orangeville, Ont., said she wants to be first in line to sign up for eMerge. Beeline is an ISP dedicated to businesses with 4,000 customers.

Green said she has gone to some of the bigger Canadian banks to set up e-commerce sites but was discouraged by the cold reception she found. She said her local branch of Canada Trust told her the bank don’t offer such services even though she said its Web site showed that it did, and the Royal Bank wanted a $10,000 deposit because of risks involved.

Green ended up signing up with Citibank Canada, but she said trying to co-ordinate the technical and financial sides of e-commerce has been tough.

“[eMerge] has it all together. It looks like a real solution for us…You definitely need other pieces (than just the bank) because the customer today wants a full solution and the small ones just can’t afford it,” Green said.

Joe Greene, director of telecommunications and Internet research with IDC Canada Ltd. in Toronto, said eMerge’s pricing structure looks reasonable.

“If you were to bring in four or five consultants to get these things together for you, I’m sure this would be cheaper than doing that,” Greene said.

Greene added that this kind of bundled package isn’t unique, but that eMerge is adding a new twist by having the bank as part of the service.

“I think things like this will be successful. Our research indicates that, particularly with small and medium business, they’re the ones who really require the hand-holding and the most help in terms of taking advantage of e-commerce,” Greene said.

Valu-Net’s Lucatch said eMerge plans to “walk before they run” and keep the offering in Canada only for the time being, but the company has plans to spread into the United States and the rest of the world in the future.

Merchants interested in the package can contact eMerge through their ISP or find more information on the eMerge Web site at