Electronic Commerce & Credit Cards

The development of cards which can access different monetary services electronically has been the major boost to electronic commerce. Many computer users today are accessing commercial enterprises on the Internet, but millions more have indulged in a different form of electronic commerce simply by using their ATM card, debit card, or credit card in the course of daily business. The dissemination of such cards has been part of a long-term and evolving marketing strategy on the part of banks and other financial institutions to change the way people do business both with their banks and with retailers of various sorts. Some believe this could one day lead to a cashless society where all commerce is conducted through the use of plastic cards with electronic strips, perhaps with cards that have amounts embedded in them so that a purchase subtracts directly. These cards work because of a vast network of electronic connections, many by satellite, which allow for recording of transactions and near-instant transfer of money from one institution to another. The cards have been sold to the consumer on the basis of convenience, safety, and empowerment, and the overall campaign has been highly successful. The future likely hold wider dissemination, new forms of cards, use by other financial institutions, and greater societal reliance on electronic commerce.

The banking industry depends heavily on customer service at several levels

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g for their ATM cards as the service becomes more popular. This might actually reduce the speed with which stores are instituting this service (Steinberg C1). A similar issue is raised as banks and other financial institutions raise fees on merchants, who may then pass those expenses on to the consumer. This can mean that the savings offered by electronic commerce are watered down for the consumer, leaving only convenience as a selling point. A recent instance is Visa International's Visa Check card and MasterCard's MasterMoney card, each of which have taken business away from online ATM cards as they recorded 62 percent of all debitcard purchases in 1996. These cards are required of all merchants who handle the credit cards, but they charge a much higher fee than ATM cards, leaving affected merchants furious about the added expense (Schifrin 42-43). NEW SERVICES Visa International is developing the use of the so-called smart card with the introduction of storedvalue cards. Visa licensed the technology from the Danmont system and has been using storedvalue cards in Denmark since 1992. These are microprocessorbased storedvalue cards which represent cash and retain debit information. Visa plans to issue cards in $20

Category: Economics - E