1. The payment revolution.
Today In 2013, we are still in the middle of a payment system revolution where the cash and checks payment replace by cards and electronic payments. The tipping point of the revolution occurred in 2003 were the electronic systems surpassed the use of cash and checks in stores. By 2005,its accounted for 55% of in store payment.
Similar trends occur for recurring payments. In 2001, More than 75% were made by paper-based method whereas less than 25% were made electronically. But now, around 50% of recurring bills paid electronically.
The cashless society has been discussed for a long time. The demise of cash and checks is not imminent and many individuals can live without them. In the B2C online world, we already do. Around the whole world, a Credit card plays a major role. In most countries, it is difficult to start a business without supporting credit cards. It is also important to support payments by a verity of e-payment mechanism including banks transfers, COD, electronic checks, private-label cards, gift cards, instant credit, and other non-card payment system (e.g. PayPal).
Similar trends occur for recurring payments. In 2001, More than 75% were made by paper-based method whereas less than 25% were made electronically. But now, around 50% of recurring bills paid electronically.
The cashless society has been discussed for a long time. The demise of cash and checks is not imminent and many individuals can live without them. In the B2C online world, we already do. Around the whole world, a Credit card plays a major role. In most countries, it is difficult to start a business without supporting credit cards. It is also important to support payments by a verity of e-payment mechanism including banks transfers, COD, electronic checks, private-label cards, gift cards, instant credit, and other non-card payment system (e.g. PayPal).
The short history of e-payments is littered with remains of companies that tried to introduce new payment systems. It may take a long time (years) to make a payment system to be accepted wieldy. The “chicken and egg “problem is the most impotent element to be success in any method of e-payment.
When planning or evaluating a new payment system, a span of factors must be taken into consideration:
● Independence
Most payment systems require the buyer to install additional hardware, or the seller to use specific software. The most expensive/difficult are the hardware / software requirements, the less likely is the e-payment to succeed.
●Interoperability and portability
An e-payment system must mesh with existing systems and applications. And it must be supported by standard platforms.
●Security
The money transfer has to be secure. Usually the risk for the customer must be lower then the risk for the seller. If it is the opposite, the customer will not accept the method.
●Anonymity
Some buyers prefer to be anonymous. Cash is anonymous, where the credit card is not. So, special payment methods have to be taken to maintain anonymity (e.g. e-cash).
●Divisibility
Credit cards have problems addressing low or high Payments. Any method is likely to be address if you can buy both a candy and an airplane with it.
●Ease of use
In B2C credit cards have become the standard also for their ease of use which is important for customers.
●Transaction fees
For both customers and sellers, Credit cards have high transaction fees (up to 3%).The lower the transaction fees, the better.
●International support
E-Commerce is worldwide, so any e-payment method must be easily adopted in different countries.
●Regulations
Any new payment system must adhere to a number of national and international law regulations.