A possible serious competitor to PayPal?
Article Date: July 29, 2004
The Initial Discovery
In April of 2004, I became aware of a company called iKobo as the result of a posting on Web Design Forums, a website design discussion board. An individual who was new to the discussion board posted a series of comments regarding iKobo and its presence as a possible serious competitor to PayPal. Upon further research on the company, a series of other forum discussion board posts were discovered. Forum link examples can be found below:
KW.com Discussion Forums
SitePoint Discussion Forums
Web Design Forums Discussion Forums
The supporters of iKobo in these forums, as is seemingly the recurring trend, are new posters to the boards who elect to join and repeat various elements of the iKobo website ad nauseam. Said posts also contained affiliate hyperlinks and often made mention of iKoboís ten-tier affiliate program. For those of you who may not be familiar with discussion forums online, this is often considered to be a spam technique and may result in the poster being banned (as is the case in the Web Design Forums hyperlink above).
In some cases, customers claimed to be able to develop anti-fraud mechanisms using iKoboís Instant Payment Notification (IPN) system. An IPN system is merely intended to notify the customer of a payment having been made by one of their customers and, as such, cannot be used to determine fraud.
iKobo Company Background
From the iKobo website:
"Our goal is to make people's lives easier." - Founding vision of iKobo
Two immigrants who understood the difficulties involved in sending and receiving money internationally founded iKobo in January 2001. Two successful years later, iKobo Money Transfer is now the fastest growing money transfer company in the world - experiencing an exponential growth rate.
From the beginning the founding principles of the company have been:
Cost - Providing a valuable service at a fair price to the consumer.
Convenience - Allowing the customer to quickly and easily send money, while instantly receiving cash the moment it is sent.
Customer Service - Commitment to educating the consumer, providing live telephone support, and dedicating all available resources to ensure piece of mind when sending and receiving money. Our customer service philosophy is catering to one customer at a time.
The iKobo Money Transfer platform is designed to be the most secure platform in the world in order to prevent fraud and ensure that every customer transaction is protected. You can feel confident that your money is safe with iKobo.
The iKobo Team
Not much information is revealed, other than a feel-good description that can be best characterized as "glittering generality". The lack of information is a recurring theme across the iKobo website; in many cases, two seemingly different aspects of the site, such as "What is iKobo and How Does it Work?" and "FAQs", are identical.
The concept of iKoboís service appears to be very similar to that of PayPal, its closest targeted competitor. iKoboís system differs from PayPal in that the receiver is sent an i-Kard. The i-Kard is a VISA Electron/Interac card, which the recipient of funds may then take to a bank machine and make an ATM withdrawal. Because this is a VISA Electron card, it may also be used to purchase goods and service online; the recipient may alternatively elect to send money via his/her own i-Kard to other iKobo users.
The fees for iKobo services are very similar to PayPalís; 4% ($2.00 minimum) is deducted for each person-to-person transaction, and 2.9% + $0.29/transaction is charged to merchants. Unlike PayPal, there is an additional $1.50 deducted for each ATM withdrawal and no mention of a sliding scale based on volume for merchants.
Delivery options for the i-Kard vary in price; for many countries in Europe, the i-Kard may be shipped free of charge via express delivery. However, countries such as the United States and Canada, an express delivery charge of $9.95 applies.
IKobo accepts VISA and MasterCard, but not debit card or banking information.
iKobo caps customer sending and receiving at $200 USD per month; however, these limits may be raised at the request of the iKobo user if said user sends copies of various documents to iKobo (such as a driverís licence, utility bill, or note from a chartered bank indicating the customerís account is in good standing.) No explanation is given as to the usage of this additional information and why it is required.
Hypothesis & Experimental Plan
Based on the lack of information provided by both the iKobo website and its supporters, I was suspicious that iKobo was a scam service and that, as a sender, my money would not reach the intended recipient.
Therefore, I devised, with the help of one of my staff, a controlled experiment in which I would send the staff member $10 USD ($10 USD being the required minimum for the first iKobo transaction) through the iKobo system. The staff member would in turn, sign up as an iKobo member and attempt to determine if he received the i-Kard and was able to cash it.
In addition to the testing of the system, I would attempt to contact iKobo via the email address I obtained from a WHOIS lookup on the iKobo.net domain name (firstname.lastname@example.org), as well as email@example.com. For the purposes of privacy, and to ensure that I would be able to assume this identity for future research, I used an assumed name for these purposes.
Attempt 1 - Registration & Sending Money via MasterCard
On July 6, 2004, I registered as an iKobo user. The registration process was a two-step process.
Upon submission of this form, an email is submitted containing a hyperlink. The user, upon clicking the hyperlink, is taken to Step 2.
Step 2: The user is provided with a form that asks for additional information (address, phone, date of birth.) For some reason, a disabled form field containing country code is included. At this point, the user is registered and may proceed to the credit card entry form to enter a payment.
Payment Form: This is, for the most part, a standard payment form asking for name, address, and credit card information via a Secure Socket Layer. However, there were three abnormalities with regard to this form:
- The credit card issuing company telephone number was included as a required field.
- The CVV2 (credit card verification number on the back of the card) was placed by itself on a separate form.
For each credit card used on the iKobo system, an initial small amount is added to the transaction to determine if the sender does indeed possess the credit card. iKobo sends a daily reminder to the user to confirm that the transaction did go through and to check his/her credit card statement to find and verify the amount. If this amount is not verified within 5 days, the transaction is cancelled.
In the case of my MasterCard, nothing had happened for a two-day period, although I did receive the reminders daily. As a result, I contacted support via the iKobo Live Chat option.
Support Chat with Penny Wang, July 8, 2004
The following chat log was copied and pasted directly from my web browser, and is shown unedited with two exceptions:
- The HTML bold tag for Pennyís name kept showing up as "B>" on intermittent occasions, possibly an indicator of manual typing.
- Personal information such as an email address has been blocked out for privacy and future testing reasons.
Penny: Thank you for choosing iKobo. My name is Penny. How may I help you today?
You: Hi Penny.
You: I tried doing my first send two days ago, but I still haven't received the deal from my MasterCard where the small amount is supposed to be on it yet.
Penny: what is your email address?
You: (email address provided, although I had to enter this in to use the Live Chat).
Penny: For security purposes I will need for you to verify your two security questions
Penny: your mothers maiden name and name of high school
You: (information provided)
Penny: thank you
You: No problem.
Penny: you have up to five days from when the transaction was made to verify the small amount
Penny: sometimes it may take up to 72 hours for the amount to show
You: Why so long?
Penny: have you tried calling your credit card company today?
You: They said they didn't have anything recorded.
Penny: you would need to ask them if there was any small charges made or any pending transactions that have not yet posted
You: Okay. I did that, and they said no. So I guess I still have to wait then.
You: What happens if it goes past that time frame and nothing gets posted to my account?
Penny: you may want to contact us before the fifth day if the amount has still not shown
You: And then what?
Penny: and we will extend for two more days
Penny: usually it should already be posted
Penny: once you have obtained the amount you will need to log into your ikobo account
Penny: click on 'verify account' and enter in the amount your credit card company has told you
Penny: since you are using a mastercard and we have been having some difficulties in processing those, there may be a possibility that after you verify the amount it will cancel the transaction
Penny: if that happens then wait a couple of hours and log back in and try to send the money again. This time it should go through and you do not need to verify the mastercard again
Penny: for the mastercards yes, we are experiencing some slight difficulties and we thank you for your patience in this matter
You: How would I cancel the first one then, so that I don't get charged twice?
You: Oh wait, never mind. I misread what you said.
Penny: once you verify the small amount it will be credited back into your account
Penny: the one that is cancelled will not go through
Penny: so you would not be charged
Penny: does that make sense?
You: Yeah, it does.
Penny: Was there anything else I can assist you with today?
You: So there will be no charge at all until the transaction goes through on my MasterCard.
You: No, that was it.
Penny: your welcome
Penny: Thank you for choosing iKobo and have a nice day! : )
Penny: Please email firstname.lastname@example.org in regards to my service. My name is Penny Wang. Thank you for your time in this matter. : )
You: Okay. Thanks.
Attempt 1 Conclusion
On July 13, 2004, the transaction was cancelled. My MasterCard was never charged.
However, I did notice that my limits as a sender and receiver had been unilaterally raised to $500 USD. I had not contacted iKobo by telephone or email with regard to raising my limits, nor had I sent any of the "required" documentation.
It also appeared that Penny Wang was correct. MasterCard does appear to cause processing difficulties with the iKobo system.
Attempt 2 - Success in Sending Money via VISA
On July 13, 2004, I attempted to resend the $10 USD via iKobo using my VISA. The transaction went through successfully and on July 16, I received the small withdrawal amount on my VISA statement. I entered this amount in and the transaction was verified and the withdrawal amount refunded two days later. However, a loss of $0.23 occurred when iKobo refunded the money due to a change in the USD to CAD exchange rate.
My staff member received the i-Kard on July 23, 2004, 10 days after the transaction start date and 7 days after its approval.
No transactions have appeared from iKobo or any other retailers before or since the initial two attempts on either of my credit cards.
Support Email July 8, 2004
I attempted to send the following email on July 8, 2004 to email@example.com, as well as firstname.lastname@example.org:
To whom it may concern,
My name is (nom de plume), and I have been hired by ADAM Web Design to write feature articles for the articles section of the ADAM Web Design web site. This section may be found at http://www.adamwebdesign.com/articles .
I have become aware of iKobo recently and will be writing a feature article about your company, as it is one of the relative newcomers to the payment processing market. In the process of performing my research, I have uncovered some information and comments which I find rather concerning from the standpoint of the end user of your products. In the interest of fairness, I would like to give you the opportunity to state your side of the story to any readers of the ADAM Web Design website.
Please note that I will be publishing both this email and the response to it (or lack thereof) in the ADAM Web Design iKobo article, as a means of documenting my research on this subject. This article will be syndicated throughout various article publication websites and other channels of distribution. These channels of distribution can greatly benefit your company and provide it with some additional exposure, should my findings be favourable. Your response will be a factor in determining how favourable my review will become.
My questions are listed below:
The first testimonial on your website refers to a site (www.everythingforeveryone.com) that is under construction despite the following comments:
"Like every business person goes, I was in search of a reliable and easy-to-use merchant service. I traveled through each and every search engine to find the best merchant service that would use credit cards. The services I offer, paying online would make things go pretty fast. One fine day, after exhaustion, I found iKobo and it was my lucky day!! I registered right away and launched my site the very next day! Thanks iKobo for launching such a great, reliable and easy service."
Fatmah Azam Ali
The website mentioned in the second testimonial (www.CyberSamrat.com) does not have any open mention of iKobo.
None of the other customers listed have websites using iKobo as well.
Do you have any merchant websites which openly use iKobo, so that I may question them about their experiences as I research this article?
In your Help section, there is an FAQ that reads as follows:
Q: What is iKobo?
A: iKobo is the fastest most convenient way to send and receive money world wide. You can send and receive money anytime in over 240 countries. Using iKobo you can send funds from your home or office, and your recipient can access the funds at over 800,000 ATMs worldwide using the iKobo i-Kard. Our Affiliate and Merchant programs are the best and most rewarding opportunities on the internet.
Since there aren't 240 countries in the world (not counting dependencies and territories), are dependencies and territories being included in this calculation?
Some countries, such as the country of Georgia, are able to send money but not receive it. Why is there a restriction on the receipt of funds?
Why would mailing an i-Kard be necessary, as opposed to email confirmation of payment similar to the way in which banks perform email money transfers? Does this not add unnecessary expenses to the service, thereby increasing its cost?
Why is information such as a credit card statement, utility bill, and/or birth certificate necessary for the raising of limits, and why do you offer the relatively non-secure method of email as a possible means of document delivery as opposed to a secure upload/download site?
What do people who don't have either a driver's license or a utility bill require in order to raise their limits?
What exactly does iKobo to manually validate information in order to raise a limit? And what do they do in areas where privacy acts may make it impossible to run a check on a driver's licence?
What exactly does checking this information establish? All you can do with a driver's license in Ontario, for example, is check to see that it's valid. That doesn't necessarily imply that the person who owns it has never committed a fraudulent act. The same logic would apply with a utility bill.
There are many posts on various Internet-industry-related discussion boards that tend to arouse suspicion. A few such examples are below:
http://www.kwcom.net/cgi-bin/forumtest/forum/forum_posts.asp?TID=228&get=last (all users)
http://www.wholesale411.com/bbs/viewtopic.php?p=32940 (any pro-iKobo poster)
As you can see, all of these people either have relatively low discussion board post counts (one of the signs of a discussion board unsolicited commercial advertiser) or have affiliate hyperlinks (also a form of unsolicited commercial advertising). As a general observation, they also to come from areas outside of North America; a few of the more common countries for which positive testimonials are found are Romania, Pakistan and Russia. Why would there be little to no positive commentary from countries such as the US and Canada, if Canada and the US are two of the countries for which you claim are primary senders and the US is one of the countries which you claim are primary receivers?
Another rather common issue that comes up is that of iKobo's IPN/anti-fraud. Many developers are claiming to develop their own set of filters based on your IPN, yet I fail to see how this would be possible or necessary if your anti-fraud mechanism is accurate enough to capture the vast majority of fraudulent transactions. Could you please elaborate on this issue and explain in practical language exactly how this would work?
Do you communicate with bank servers via Base24 or the newer and more secure Base72?
Thank you very much for your time, and I look forward to your response.
A few notes on this email for clarification:
- Base24 does exist. It is the central banking network through which all electronic transactions, online or offline, are posted. However, Base72 does not. I included a reference to Base72 in an attempt to determine their honesty.
- I have removed my nom de plume for the purposes of being able to reuse said name for future research.
My attempt to send an email to the email addresses above failed. The email@example.com was returned by MAILER-DAEMON with the error message "user unknown" and firstname.lastname@example.org is configured as an autoresponder, encouraging the user to contact iKobo directly via their trouble ticket system.
The email@example.com email was particularly unusual for two reasons:
- The email is listed as the administrative and technical contact email for the iKobo.net domain name (see Discrepancies section).
- Emeka Ohuche is listed on the iKobo website as the president and CEO. One would think that the president and CEO, especially when listed as the administrative and technical contact for a domain name, would have a working and valid email address.
Upon receiving the instructions from firstname.lastname@example.org to use the trouble ticket system, I did so the following day (July 9, 2004). I received a polite response from "Stewart Langille" who indicated that he would be more than happy to discuss these issues with me via telephone. However, I declined this option on the grounds that I wanted to be able to provide the iKobo email response to my article readers.
The iKobo Response - 13 Days Later
On July 21, 2004, I finally received a reply from iKobo. However, I did not receive a reply from "Stewart Langille"; the reply came from email@example.com.
The reply follows, in its entirety. The indenting of each paragraph has also been included, as it was included in the original email:
Please find the answer to your request below:
www.everythingforeveryone.com is a former featured merchant. This information will be updated with our next release. www.CyberSamrat.com has a large iKobo banner toward the bottom of the page. We have many customers that sell on auction sites. Many online merchants do not show you upfront and in living color the name of their payment processor, because they want the customer to focus on the information on the site itself.
The discrepancy in the number of countries is simple. While you are absolute correct that there arenít 240 countries in the world. This refers to the ability of sending and receiving money, as not all the countries can receive money and not all the countries can send money. This number is not limited to countries only as it also includes dependencies and territories, as you pointed out. This number has been corrected on our site to reflect correctly that we deal with 170 countries worldwide.
The way ikobo works is that we charge the senderís credit card, we then make this money available to be withdrawn using an iKard (currently this is the only way the money becomes available). We do not deposit money directly into anyoneís bank account. We offer email as a means to submit information because it is convenient. We do not have a secure upload/download site that we can offer (at least not yet).
We ask for certain information pertaining to an account holder as it pertains to increasing the limits, because this helps our Verification Department maintain a good level of security, this also helps keep fraud down. We have to not only protect ourselves as a company but also our customers. People are not limited to just a driverís license and a household bill in order to have their limits increased. There are several different documents they can submit to request a limit increase.
The reason we ask for these documents is not because it tells us specific information about the customer. We use these documents to help verify their information. As far as what exactly we do in order to verify information and how we keep fraud down is not information we share. The reason being security, for both iKobo and our customers.
Studies have shown that when people are happy with a service they tend not to share the experience. Which means that very few people actually share their positive experiences. However, there are people in countries that other payment processing companies do not service, that are happy and willing to share their positive experiences about a company that does provide service to them.
IPN is not an anti-fraud device; it is designed to provide our merchants an Instant Payment Notification (IPN). This was designed with security of the customersí information in mind. I cannot comment on what developers not associated with iKobo claim to do or be able to do.
We do not share our bank partnersí information. I cannot elaborate on our processes because it is privileged information.
Thank you for choosing iKobo,
The iKobo Team
Customer Support Department
Positive Aspects Of The iKobo Service
- The i-Kard showed up at my staff memberís house within the allotted time frame (3-5 business days).
- The daily reminders to input the verification amount were very helpful.
- "Penny Wang" (the Live Chat representative) seemed to take an interest in what I was asking, although this is somewhat difficult to judge from behind a computer monitor.
- The VISA verification was relatively quick (two business days).
- My limit was raised to $500 with no additional verification required.
Negative Aspects Of The iKobo Service
- A 13-day response time for a support email, no matter the complexity of said email, is excessive.
- MasterCard poses problems for the iKobo system.
- No debit card or bank information is accepted. At the present time, only VISA is accepted consistently.
- The signup process was somewhat confusing, with multiple steps being required where one would suffice.
- The "Forgotten Password" link does not function as intended. No password gets sent to the requestorís email.
- Because of the i-Kard concept, an additional $1.50 per transaction USD ($.95 within the US) is added to the overall cost. This renders the iKobo fees higher than the PayPal alternative. This brought the total fees for the $10 USD transaction to $3.50 ($2.00 for the transaction, and $1.50 for the i-Kard).
- No satisfactory explanation was offered for the rationale behind the request for additional information.
- My limit was raised to $500 with no additional verification required. I have placed this as both a positive and negative since, while I do appreciate the right to send and receive additional funds, it directly contradicts the iKobo request for additional information.
- The company is based in Marietta, Georgia, yet the employees seem to have major problems with the grammatical aspects of the English language. There are numerous typographical and grammatical errors both on the iKobo website and in communication with employees.
iKobo.com and iKobo.net, despite appearing to be websites for the same company, are two different websites with two different sets of domain information.
Due to legal restrictions with regard to the publication of WHOIS information, I cannot reveal the results of the domain name WHOIS lookups for both companies: however, for those of you who are curious, a website such as Domain Search will allow you to verify this information.
- iKobo claims to accept MasterCard, yet MasterCard posed difficulties for iKobo during my initial transaction.
- iKoboís head offices appear to be in Marietta, Georgia, with no listing of offices outside of this area. However, they charge $9.95 USD for express delivery of the i-Kards to Canada and the US, while issuing said cards for free to countries such as Andorra, Spain and Belgium. This would suggest that iKobo is targeting the European market and/or not entirely based in the United States.
Cybersamrat.com did not have a banner promoting iKobo services on either the day I had sent the email or one week later, when I revisited this particular site.
It should also be noted that cybersamrat.com sells web design services and, as such, would not be especially likely to have the iKobo banner up strictly for the purposes of informing customers that iKobo can be accepted. The affiliate code contained within the cybersamrat.com banner also indicates other purposes.
- While many online merchants do not reveal their payment partner info, a large percentage of others do in order to let their customers know that their online purchases are made in a safe and secure manner. To date, I have not yet seen an iKobo merchant website other than cybersamrat.com.
iKobo does not appear to be a scam, as many have suggested. However, it is a company with a number of technical and support problems and needs to do a great deal more to both expand its service offering and lower its fees.
iKobo also needs to be more upfront in terms of disclosure, in order to ensure that its users have the full benefit of knowing what is being done with their information and whom it may be directed toward. Another recommendation would be to include opt-out information directly on the initial signup form, rather than forcing users to click on a subtle hyperlink that many people would not see.
It does not, at the present time, pose a serious threat to PayPal in the marketplace; however, if they can improve on the issues mentioned above, this may change in the future. If this does change, an updated review will be posted accordingly.