Internet Payment and Banks
Sahut, Jean-Michel, International Journal of Business
In the context of the development of e-commerce on the Internet, a lot of electronic payment systems have been set up in order to secure online payments. To understand the success of Internet payment systems it is necessary to analyse the strategies of e-commerce actors: consumers, "cyber merchants", managers of networks (telecommunications and payment), suppliers of electronic payment services and banks. Our results provide objective explanations of the success factors of Internet payment systems, and the domination of SSL card payment in the market (Turban and Alii, 2006). Moreover, unsuccessful experiences show that it is necessary to consider network effects (Shapiro and Varian, 1998; Shy, 2001) and which business models to implement in order to avoid killing a new Internet payment system before it is launched. This article investigates also the stakes for the banking environment of the Internet payment systems and the problem of money creation.
JEL Classification: E42, E51, G21, G29
Keywords: Electronic payment; Electronic money; Bank; Network effects; Security
The electronic commerce procures several benefits to his participants including merchants and consumers, like time savings and convenience. In order to provide these benefits in business to consumer (B2C) transactions, e-commerce needs effective payment systems (Hassler, 2001). Nowadays, online B2C payments are increasing in power in all areas of e-commerce. The enthusiasm caused by the Internet is moderated by the reservations of consumers and companies, due to the chronic insecurity reputation of the Internet. Since the mid- '90s, a plethora of innovative e-payment solutions have emerged. By way of quotation, in November 2001, ePSO (Electronic Payment Systems Observatory) counted nearly 180 systems in Europe (ePSO, 2002). However, in spite of this diversity of payment solutions, we note that the most of them approached the problems of payments from the exclusive angle of security. It created a virulent debate on the liberalization of the use of "strong" cryptography tools which facilitated regulation changes in this field in many countries.
These changes have allowed the emergence of secure Internet payment systems. However, despite its lack of security, payment cards with the Secure Socket Layer (SSL) protocol, which is a communication protocol, but not a payment protocol, always dominate the Internet payment market. In fact, the success of payment solutions can be understood only through the strategies of e-commerce actors: consumers, "cyber merchants", managers of networks (telecommunications and payment), suppliers of electronic payment services and banks.
The object of this article is thus to analyze the Internet payment solutions and their stakes for the banking environment. From this point of view, we will study the needs of users (clients and merchants), and evaluate how the payment systems apply to them. Firstly, after describing the different systems, we will present the set of analysed criteria and justify their importance in the context of users' preferences. Next, we will evaluate, with a panel of experts, electronic payment systems under the criteria previously described in order to understand the success of payment solutions like SSL card payments, despite their defects (Caunter, 2001; Wales, 2003). We will then discuss the stakes of this market. Lastly, we will consider the impact of the diffusion of these payment solutions on the banking environment.
II. INTERNET PAYMENT SYSTEMS
A lot of initiatives tried, on the one hand, to apprehend these various systems, and on the other hand, to compare them. In order to be able to analyze these systems, it is of primary importance to present their features and especially to establish a typology.
Before exposing typologies and features of electronic payment systems, a brief definition of an electronic payment system is essential because, in the literature, the term "electronic payment system" (e-payment system) is used often with senses very different. …