Bill Me Later is apparently getting popular. This is an alternative online payment system that doesn’t need a credit card. Instead of entering your credit card number, you enter your birthday and part of your social security number (so I guess it only works in the US). Bill Me Later then accesses credit databases and instantly assesses whether you are credit-worthy. If you pass the test, goods are shipped and you’re sent a bill that you can pay later, or pay over time with interest.

I must admit I haven’t really checked it out, but I’m having trouble understanding why this is popular, as to me it only sounds like extra hassle. As well as entering some details to a website, I have to write a check or something to pay a bill later, and I have to remember to pay it. Where’s the value in that? Bits says:

It is aimed at high-income, credit-worthy customers who are shy about entering credit card numbers online, a surprisingly large group.

But I don’t really get this either. If they’re shy about entering credit card numbers, why are they not shy about entering their social security number and birthday? Given that bill me later exists (and is accepted by Amazon, among others), if someone gets these details about you, they’ve as good as got your credit card number. I wonder how Bill Me Later makes anything less risky?

That said, in Japan, almost every online retailer has a “bill me later” type option. For a small extra fee (300 - 500 yen), they send you a bill after you’ve received the goods which you then go and pay in cash at a convenience store. As far as I know, they don’t even do credit checks — I guess the extra fee covers the expected rate of fraud, plus the cost of sending the bill and a commission for the convenience store. However, Japanese people have a cultural preference for paying by cash, and people seldom use credit cards even when buying something in person at a store. So I’m not sure how well this model will transplant to other countries.