Currency of the Internet Realm? So Far, It's Plastic
Kutler, Jeffrey, American Banker
For all the talk about creating new forms of money for commerce over computer networks, research indicates an old standby is beating them to the punch.
While it may be too soon to draw conclusions about ultimate payment preferences on the Internet and other interactive computer systems, a study commissioned by Verifone Inc. shows credit cards have all the early advantages.
Sellers of goods and services on-line are attuned to credit card acceptance and, like many conventional retailers, they find consumers simply like and want to use their cards, according to the survey conducted by Global Concepts Inc. of Atlanta.
Merchants expressed some reservations about the security of on- line systems - an issue raised anew this week when Netscape Communications Corp. acknowledged a flaw in its Internet browser software. But improved data encryption and related technologies are poised to fill the breach, Global Concepts pointed out.
Meanwhile, among Internet consumers polled by the research firm, security concerns generally diminish after the successful completion of on line orders. Though buyers have given most of their early payment votes to credit cards, they do express a desire for other options that might include digital money or electronic checks.
These findings were revealed last week at a seminar in New York, the latest in a series sponsored by Verifone to coincide with the American Bankers Association's annual bank card conference.
This year's study, "Internet Commerce: What Merchants and Consumers Think About Payment on the Net," was cosponsored by MasterCard International and Visa International, which are likely to be gratified by what it says about their products.
Global Concepts over the last four months conducted extensive interviews with a cross-section of 40 merchants to gauge their attitudes about the budding commercial medium.
The responding merchants ranged in size from more than $1 billion in annual sales (such as Apple Computer Inc., Kroger Co., and Spiegel Inc.) to under $1 million (American Eagle Fireworks, Lobster Direct), and not all had established Internet presences.
At the same time, the Alanta-based research firm gathered more than 450 consumer responses to a survey it placed on the Internet, and followed them up with a small number of focus-group interviews.
All such surveys run the risk of being too limited to be scientific, but few in the nascent world of electronic commerce have been as extensive as the Verifone-Global Concepts effort, and its results dovetail with others' findings and intuitions.
The card associations on their own have posted questionnaires on the Internet to gauge interest in on-line shopping and payments. Of 117 people who responded to a Visa-sponsored inquiry in May, 65 had made Internet purchases and 42 of those said they paid with a bank credit or debit card. MasterCard reported in June that it found 66% of respondents to a survey on its World Wide Web home page used the Internet to shop around and 28% had actually purchased goods or services.
MasterCard president H. Eugene Lockhart told the Smart Card Forum annual meeting this week that about 25,000 merchants are selling over the Internet, primarily taking credit cards. …