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Unit 10: Cash Management

global impact. Much discussion has taken place with regards to the development of Notes
“smart cards” to facilitate online transactions. Smart cards allow for smaller
transactions and provide anonymity (ensuring privacy) to the consumer while
making the purchase. American Express is developing a smart card that would
include a chip to allow the storage of digital data (transaction history and monetary
values). The use of Smart Cards also requires a “reader” be placed on a consumer’s
machine for accessing the web (whether a PC or a mobile device). This additional
need of infrastructure acts as a barrier in its mass adoption by all the parties involved
in the transaction be it the consumer, the e-tailers or the payment providers.
(ii) PayPal: PayPal is a tool that facilitates person 2 person (P2P) transactions in an online
environment such as the eBay (eBay now owns PayPal). This payment option allows
the web sites and individuals who do not accept credit cards to process online
transactions in an effective and efficient manner. Both the transacting parties are
required to have their own Paypal accounts. However, compared to a credit card,
Paypal is a much secure online payment service since credit cards numbers are not
transmitted over the internet.

(iii) VeriSign: VeriSign provides secure online payment options to facilitate online
commerce. It purchased Cybercash that offered multiple payment solutions to its
customers.
For the online retail markets to grow to their full potential, a standard and secure medium
of exchange needs to evolve so as to reduce friction in the virtual global market place.
With respect to the web, we need to develop a medium that becomes a standard to increase
the participation rates of e-tailers and consumers. Since credit cards have taken a lead, they
may become the standard. They do not facilitate micro transactions, which clearly would
open up new markets that will be exclusive to the web. This is an area where we not only
need to develop a medium to facilitate exchange, but also determine the likely goods
(web content, music etc.) that will become viable for an online exchange.
3. Personalization vs. privacy issues: In an online environment, there is a conflict between
the need for privacy on the part of the consumer, and the need to be able to personalize the
offering on the part of the e-tailer (aimed at providing a better experience to the consumer).
Finding equilibrium between the two is tricky. E-tailing solutions that can simultaneously
address both the issues can make a significant impact on the growth of this segment. This
also ties in with new payment systems that are developed, as the payment (transaction)
involves an exchange of the critical data. Issues relating to the ownership of that data (after
the transaction) and the rules governing the use of that data are important.

Many upcoming companies are offering intermediary services focusing on certification of
e-tailers and their use of the personal data collected from the customer during an online
transaction.
Most current personalization solutions focus on personalization based on the user experience
with the individual web-site. Systems need to be developed that allows for personalization
across multiple web-sites or the entire web and the connection between the e-tailer and its
physical presence in case the customer visits both.
Other risks associated with e-tailing include the security of the transaction and the integrity of
the business with which the customer transacts. The customer is justified in being concerned
with the security of the transaction data provided in an online transaction. Since the e-tailing
environment does not provide the same assurance as the physical world in terms of the integrity
of the business, e-tailers with an unknown brand name need to make extra efforts.

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