Options in electronic payment systems

Telemarketing & Call Center Solutions, Sep 1996 by Madamas, Nick

In the beginning of the telemarketing era, the options for collecting payment were limited. The acceptance of credit cards was still growing, C.O.D. was a significant factor and the check was often "in the mail."

Fast forward to the future - a future of cashless purchases via the Internet linked with a call center for personalized service, electronic wallets and, as some believe, barcoded tattoos for security verification.

Today's new marketplaces require - even demand advanced, new payment technologies. As facilitators of commerce in the new marketplaces, call centers must continue to update and expand the payment options they offer their customers and their purchasers. While some of these new technologies exist only in advanced beta testing or even in the minds of their creators, those advances provide the savvy call center developer a significant edge.

Along with today's new marketplaces, today's new consumers want options. They are not satisfied with the one-size-fits-all mentality of yesterday. These consumers want information and the ability to customize and accessorize their purchases. They also want payment options. They require the ability to determine how they will structure the investment they are making -- large or small.

Today's consumers are also global. The businessman in Germany is buying technical books from the United States, while the student from Canada is buying music from the United Kingdom or clothes from Italy. International commerce requires global payment options.

It's a very exciting time on this digital planet as sales via the Internet continue to grow. Today's estimates show 28 percent of personal Internet users buying through the Net, and 19 percent of business users. In the year 2000, global Internet purchases are expected to top $600 billion, and double to $1.25 trillion by 2005.

It is impossible to predict with certainty which of today's electronic payment systems will survive into the next century. Several are electronic versions of current technology. Others are hybrid systems designed specifically for Internet and electronic commerce. Electronic Cash

Electronic cash (e-cash) is designed to allow consumers to make purchases of low dollar amounts via e-mail or the Internet with the security and privacy of paper cash. At the same time, the merchant can securely sell lowpriced products without concerns for collections or separate standalone payment systems. With ecash, you can pay for access to a specialized database, buy software or a newsletter or simply order Tshirts or a pizza.

Using one of several proprietary e-cash softwares, a customer withdraws digital money from a "bank" and stores it on his local computer. The digital money generally takes the form of electronic "strings" or an encrypted numeric sequence. The customer can then spend some or all of the digital money at any shop or with any merchant that accepts the corresponding software. There is no requirement for the customer to preregister with the merchant or transmit personal data such as a credit card number.

One of the unique features of ecash is anonymity. With e-cash, as with paper cash, the identity of the payer is not revealed automatically. This allows the payer to control the release of personal information. During a payment, a payer can, of course, identify himself or herself, but only when desired. Most e-cash solutions offer one-sided anonymity; when clearing a transaction the payee is identified by the bank, thus eliminating a potential criminal element.

E-cash also offers ease of use to the merchant. The amount of received e-cash is guaranteed as the amount of value involved with the transaction. The merchant can immediately provide the goods or services purchased. The ease-of-use allows customers to handle transactions completely by themselves. Part of the e-cash concept allows any user to accept or send e-cash payments to any other user. You can then pay back that friend the five dollars you borrowed last week.

The major problems with e-cash focus on global merchant acceptance and mechanisms for making deposits to the e-cash bank.

Electronic Checks

One technology making the electronic jump is the ordinary checking account. Using the current banking system, electronic checks (e-checks) focus on converting the check data to electronic form and instantly transmitting the data from customer to merchant. This data transmission can take place via telephone, facsimile machine or the Internet.

E-checks accommodate the purchase of any amount of goods or services, allowing the customer to use funds on deposit rather than making a credit purchase. With echecks, you can purchase software or an entire computer, buy groceries or complete a stock market transaction. The size of the purchase is limited only by the size of the customer's bank account. By using the existing banking system, e-checks are guaranteed national and international acceptance.

In an e-check scenario, the customer is asked to recite information regarding his or her checking account via telephone, fax or Internet. Using either a manual or software solution, the merchant uses that information to construct a paper check that is deposited in nonelectronic form (in the traditional manner).