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For efficient and effective payment systems, it`s all about integration
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By the third quarter of last year, more than 19 million adults used credit cards to make online transactions, compared with 9.3 million in 1998 and 4.9 million in 1997, according to Cyber Dialogue, New York. Though these numbers mean that credit card payments still make up more than 90% of all online transactions, there’s some movement toward cash and checks. Yet most industry experts believe it could be several years before other payment forms gain critical mass.
According to Michael Turner, vice president of marketing for ClearCommerce Corp., online retailers should keep an eye on stored-value and gift certificate services, which are gaining popularity. These payment methods, such as Flooz, require separate shopping cart software to support and route payments.
Turner says ClearCommerce’s software suites integrate easily into most checkout systems and allow merchants to accept all types of credit cards and choose the card processor right for them. In addition, the company offers fraud protection, shipping and tax calculation, plus a module for digital downloading. It creates a new URL and downloads what the consumer purchased over the Web and checks to make sure all information was received.
Meanwhile, the recent introduction of American Express Co.’s Blue smart card has consumers and retailers taking notice. If smart cards gain market share, they stand to supply a wealth of consumer information. Smart cards contain a digital wallet, a feature that speeds up ordering processing at the checkout.
Among today’s payment system players, most offer standard or customized systems that accept digital wallets. But with no standardized wallet technology, wallets a often aren’t compatible from site to site, a fact that diminishes their functionality for consumers.
Until a wallet technology standard is set, most wallet vendors are following the most commonly used format. The trouble is, most merchants have not complied with creating forms that fit most wallet formats. To counter that, some wallet vendors have developed intelligent wallets that spot empty fields and save data for future visits to a particular site.
Globeset Inc. of Austin, Texas, is working on that capability. The company offers a server-based wallet application that accepts any type of card and multiple cards.
Ricki Boyle, vice president of marketing for Globeset, believes that eventually, wallets will be become more like shopping bots. “Wallets will be compatible with other online payment mechanisms such as micropayments, alternative currencies, and the purchase and redemption of gift certificates, loyalty points and coupon redemption,” he says. “It will be an integral part of the overall consumer, merchant and financial service provider relationship.”
Globeset is focusing on the merchant side and offers one-click buying, rather than requiring merchants to conform to a protocol or use form-fill technology. “We are working on wallet technology that will map a merchant’s site, which allows the wallet to properly identify the structure of that site and interact with it accordingly,” Boyle says. “For online shopping to flourish, purchasing agents-or wallets with multiple types of mechanisms and tools-will be essential.”
Globeset’s basic wallet technology is free to merchants. And Boyle says the company already has issued wallets through Citibank, Chase Manhattan Bank and American Express. Globeset also provided the wallet software for the AmEx Blue card.
Though time will tell whether wallets and other forms of payment catch on, retailers who integrate their checkout and fulfillment systems stand to be ready.
“Within the next year or two there will be payment integration of the various channels for a merchant’s online presence, physical store and catalog,” Current Analysis’ Marino says. “Once that happens, merchants will have the ability to integrate transaction data from all those channels, which will be important for companies to coordinate their sales and marketing strategies as the dynamics of customer behavior change.”