Jumio says use your webcam to swipe credit cards

Jumio, a secretive online payments start-up created by Jajah founder Daniel Mattes, is finally ready for its close-up. Thats a fitting metaphor, because Jumio is enabling online credit card payments made by scanning a card with a computer webcam.

Dubbed Netswipe, the technology allows online retailers to easily process a debit or credit card payment by having a user just hold up their card to their webcam. The video is encrypted and streamed to Jumios servers, which extract the card number and information and processes the payment.

If it sounds familiar, weve written recently about other recent mobile payment technologies that use a smartphone camera to capture credit card information, including AisleBuyer and Card.io. Mattes said Jumio, which is also going mobile soon, goes a step further by not just using optical character recognition to pull out the credit card number; instead it utilizes sophisticated computer vision to authenticate the card. For example, by analyzing the video stream, Jumio can confirm that its an actual card and not just a copy of a credit card. It can detect the raised lettering and can determine if it is plastic, or whether it appears to have metal inside.

This can combat fraud, a major problem for online payments. And it can also speed up the online check-out process, because it makes an online payment like a card-present, point-of-sale transaction. Users! still n eed to enter in their credit card security code manually. But because the card information is entered through the camera and the code is typed with an onscreen keypad using a mouse or track pad, malicious key-loggers cant detect the credit card information, said Mattes.

Theres a huge gap between convenience and security on one side and online payments on the other side. Our solution will bridge that gap, Mattes told me in a phone interview.

Mattes said the credit card information is not stored on Jumios servers. Merchants can easily implement a payment widget on their site.That allows online companies to avoid instances where consumers abandon their online shopping carts before paying. Mattes said during a six-week trial, merchants who used Netswipe reduced theirchurnrate on transactions from 52 percent to 21 percent. The company said in a white paper that it reduced fraud costs by 36 percent during the trial, and saved users an average of 2.3 minutes per transaction.

Jumio doesnt just extract the card information; it also processes the payment. It charges small merchants 2.75 percent per transaction or 50 cents a scan if they want to use their own payment processor. Medium-sized merchants can integrate Jumios payment modules without becoming PCI compliant, while large merchants can directly integrate into Jumios payment platform.For direct integration of Netswipe, Jumio will lower the risk charges it passes on.

Mattes said the time has come for people to swipe their cards using webcams. He said almost all computers sold in the last couple of years now ship with webcams. The next step for Jumio, which has patented its technology, is to go mobile, something it plans to do in the next few months. That would allow faster mcommerce payments but could also put Jumio in competition with Square, which uses a dongle to process payments from a smartphone.

Themobile market is a future market. Today, the market is not that big, but its poised to grow. It will surpass online transaction! s. Our m obile solution will be Square without hardware. Its seamlessly integrated with an online solution, Mattes said.

Mattes has a history of success,selling Jajah to Telefonicafor $207 million. His reputation has helped attract a pretty impressive list of investors and advisors. The company listsZain Khan, a former Google executive, Mark Britto, a former Amazon executive, and Maarten Linthorst, a former NASA partner, among its advisors. And in March, it closed a $6.5 million Series-A roundof funding led by Facebook co-founder Eduardo Saverin. But the company faces plenty of competition in the online payments space.

PayPal looms as a competitor both online and in mobile, and a gaggle of competitors like the previously mentioned Card.io and Aislebuyer are also enabling mobile card-swipe payments via a camera. Mattes said Jumio, which is available in the U.S. and western Europe, will push hard on marketing first in the U.S. before broadening its scope. I think it has a good shot at successfully jumping into this market. Online and mobile payments have a lot of room to grow but people need to find it easy and secure, something thats not always the case. Theres going to have be some education around Jumios product, but I imagine consumers who are already getting used to depositing checks through smartphone pictures wont have too much trouble.