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In the mid-1990s, just as the Internets promise as a merchandising platform was being championed by a handful of visionaries, the most persistent stumbling block offered by naysayers was the payments process. How could web merchants offer convenient and secure payments, they wondered, without engaging in a total and expensive overhaul of the retail payments system? Indeed, some of the best known Internet payments hopefuls at the time were companies developing sophisticated digital cash networks and calling for smart cards that secured web transactions back to the consumers desktop.
Today, new millennium
terms like e-cash and digital wallets are stuck on the payments industry
sidelines. And smart cards, though finding applications elsewhere, are
no closer to seizing their Internet promise than five years ago. Does
it mean that progress on web-based payments has stalled? Hardly.
Explosive E-Payments Market
To be sure, the web-based
payments business initially attracted pioneering companies that focused
on electronic commerce as a specialty. But in the last couple of years,
the fast-growing retail Internet payments market has attracted huge competitors,
such as Certegy Check Services, formerly known as Equifax Check Solutions,
which is looking to leverage in this new market the dominant positions
it built in conventional retail payments years ago.
This growing list
of e-payments processors has quickly produced an equally broad array of
e-payments products, including credit card, PIN-based and off-line debit
cards, electronic checks, and so-called peer-to-peer payment programs
under which web buyers and sellers fund payment accounts managed by the
third-party processor. Many of these are also offering a broad array of
value-added services, which, when taken together amount to a complete
In On E-Checks
With one of the oldest
and largest repositories of consumer credit and check verification data,
Equifax has been a key behind-the-scenes player in credit and check authorization.
A year ago, it entered the web payments market with an electronic check
payment product, which employs its massive risk management database to
authenticate the e-check and uses the ACH to transfer payment electronically.
Earlier this year, Equifax Inc. spun off its Equifax Check Solutions into
a stand-alone company that took the name Certegy Check Services.
Whether the check
processing service is provided by Certegy or by a third-party vendor,
the Certegy database is an essential ingredient to the e-checking service
that the company now aggressively markets to web merchants. There
are anywhere from 40 million to 70 million people who do not have credit
cards, and in addition some cardholders are maxed out on their credit
lines, says Jan Whitfield, vice president of Internet sales for
Certegy. But millions of those people do have checking accounts,
and the retailer is missing out on additional sales by not accepting all
forms of payment. Retailers are pressing for web-based check payment
as well. Says Whitfield: Most retailers selling on the web today
are brick-and-mortar merchants who take checks at the store and want to
extend that choice to all their sales channels.
The Missing Ingredient:
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