previous initiative was a service that would allow consumers to charge purchases
to their phone bill, will announce a new charging and billing system that is
completely Internet based. The eCharge system will allow consumers to sign up,
get real-time approval and buy immediately. Other features allow the creation
of sub-accounts with spending limits for individual family members. A consumer
can use eCharge on any website that had signed up with the company. Users can
view their account statements online and even pay online. Online merchants will
pay less per transaction than they do to traditional credit card processors.
George Fleming, co-founder of eCharge, "The use of VISA and MasterCard online
will become obsolete because their old technology, high-cost infrastructure
and lack of agility clash with the philosophy of the Internet." eCharge clearly
believes that it has found the Holy Grail of Internet payments. Their current
offering, "eCharge MY PHONE," has found its niche with a variety of websites,
most recently MSN, but has hardly become ubiquitous. CyberCash, probably the
best-known entrant in this arena, recently abandoned its CyberCoin offering
for micropayments, although it does have other offerings on the web. DigiCash,
the first entrant, recently declared bankruptcy.
As with "eCharge
MY PHONE" there's no reason to assume that eCharge won't find its own niche.
There should be a way to simplify buying - Jupiter Communications claims that
27% of online transactions are abandoned because the process is too complex
- and lower fees to merchants will be welcome. But there are three important
considerations to take into account. One is that there's no dearth of competitors.
Second is that the major credit card companies and their close allies the banks
will certainly respond. But the most important issue is discovering what's going
to succeed with consumers. This is the salient issue and affects every player
from merchants to banks.
only confirm the conventional wisdom that security and privacy are more important
than complexity in keeping many potential consumers from making purchases online.
While word of mouth and familiarity are likely to erode consumer concerns, a
major turnaround on security issues by the unconvinced will require a massive
PR campaign. Such a campaign is most likely to come from credit card companies
and banks, and smaller players like eCharge will probably benefit but won't
get brand recognition. (Interestingly, Intel has just announced that sites carrying
its advertising will have to disclose to consumers what personal details are
collected online.) Privacy issues revolve around whether consumers are willing
to trust websites to protect their personal data and to refrain from selling
it. Here eCharge and similar vendors have a chance to stand out, because consumers
need only trust them, as opposed to each site where they do business. eCharge
would be wise to emphasize their privacy advantage to consumers: It's early
consumer acceptance rather than lower merchant fees that will extend their reach.