Payment systems for e-commerce: Page 2

Posted December 10, 1999

David Strom

David Strom

(Page 2 of 4)

Buyer authentication

The latest innovations in Web payments have to do with personalized shopping portals and new ways to authenticate buyers. The portals involve companies such as ShopNow.com, iGive.com, and eBates.com, and offer buyers a mechanism for receiving rebates for shopping at stores that are members of the portal's network. The benefit for storeowners is to provide visibility and drive traffic to their storefronts. Users benefit by getting discounts for frequent purchases. Only time will tell whether these networks will get established. Still, they are a minimal investment of from several hours to a day or so of programming for any storeowner and worth trying.

There are three ways to authenticate buyers at any storefront. One is to use browser-based cookies--small text files that are created by a Web server on each visitor's hard disk--and tie the cookie to a particular user ID or storefront transaction. While this is relatively easy to implement, many shoppers are unfortunately wary of cookies because of security or privacy issues and have set their browsers to not accept them. As an example, Amazon.com uses cookies to identify returning shoppers, so they don't have to reenter their shipping address or credit card number. This information is stored on Amazon's own computers, and the cookie just contains a small pointer to Amazon's customer database.

A second method is to use a straight database log in, like book and music retailer Borders Group Inc. does on its Web site--www.borders.com. This means that buyers have to remember their user ID and password before they can continue to shop. A third method is to use cryptographic certificates or one of the one-click networks.

Crypto is difficult because you first need to establish a public/private key infrastructure and send the various keys around to your customers. While it sounds good in theory, the practice is much more difficult and requires a great deal of complex set up and configuration to work properly. For that reason, a number of one-click vendors have been established over the past few years to make the process easier for customers to buy things from Web storefronts with a simple, single click of the mouse.

The one-click vendors, including Cha! Technologies Services Inc., qPass.com, iPin, Trivnet Inc., and others, don't use their own form of cyber-money but do provide users with the company's own ID tied to their credit card account numbers. When shopping at a merchant that is a member of their network, users don't have to do anything more than provide their ID and password, and the transaction will be billed directly to their credit card. The idea behind the one-clicks came from Amazon.com--one of the first online merchants to store customer information in a cookie--so returning shoppers didn't have to fill out billing information again. Newer innovations include tying IDs with ISP accounts and consolidating the billing of items purchased with users' IDs to their monthly service account bill.

These one-click providers are useful for sites selling digital goods or for users who want to aggregate a series of small transactions in a single bill, such as a daily "pass" to a newspaper Web site or purchasing inexpensive software upgrades. The problem with the one-clicks is one of critical mass: In order for them to succeed, they have to be accepted at a wide array of online merchants and have thousands of users already set up. To date, one-clicks have met with very limited acceptance.

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