Food and gift basket sales increased 4.7%, but total e-commerce, which includes online and telephone orders, increased less than 1%.
Visa and MasterCard may be forced to make radical alterations in their interchange fee structure as the Internet becomes a more important force in the world of commerce, says Paul Garcia, president of Atlanta-based NDC/eCommerce. "I would say that at the physical point of sale, interchange is still a good deal," he says. "But on the Internet, it's too expensive." If something is not done for online merchants, the credit card industry could find itself cut out by independent service providers, other utilities or telephone companies, who could simply add purchases to the monthly telephone bill. "It's a cliche, but the Internet really does change everything," Garcia says. NDC is exploring ways that it can take advantage of emerging nontraditional payment vehicles for electronic commerce, he adds.