By Paul Lang, Editor, Sell It!
April 1998
When it comes to accepting payment over the Web for business to consumer transactions, most discussions center on the use of credit cards: typical concerns include how to securely process credit cards, how to get merchant accounts, how to avoid credit card fraud, and how to avoid charge backs.
This is not surprising as credit cards are by far the most common method of making payments on the ‘Net. But what about consumers who don’t have a credit card or don’t feel confident enough to use it on-line? And what about vendors who don’t qualify for or can’t afford a merchant account?
One potential solution comes from eCharge who have launched an innovative system that allows consumers to charge the cost of Web purchases to their normal, monthly telephone bills.
From a consumer’s perspective, the process is straightforward. First, they select a product or information service on a participating merchant’s Web Site and elect to pay for it with eCHARGE. Once they have verified the transaction, they are automatically disconnected from their ISP and connected to a 900 number associated with the product or service they wish to purchase. Their telephone bill is then debited with the cost of the goods purchased after which they are given the option to reconnect to their ISP.
eCHARGE predict that this “click and buy” simplicity will result in widespread adoption of their system by consumers. Other advantages for the consumer include anonymity – no personal details are provided to the merchant – and security, as there are no account numbers or sensitive data for hackers to collect. These benefits come at some cost as eCHARGE levy a “Secure Transaction Fee” on the consumer of between $0.50 and $2.00, depending on the value of the goods purchased.
The system does not currently support the selling of “hard” goods and there is a $50 limit per transaction, so the system is not suitable for all vendors as eCHARGE readily admit. They are targeting the system at subscription services, information and software download, and online charity donations.
Vendors will find the cost structure for eCHARGE considerably different from that of a credit card merchant account. The typical cost structure of a credit card merchant account involves a high set up cost – several thousand dollars is not unusual – with a relatively low transaction cost of 2%-4%. With eCHARGE, there is a low start up cost in the form of a $50 annual subscription coupled with a relatively high transaction cost of about 7.5%. There is also a minimum monthly fee of $25 that is waived if gross transactions exceed $500. Prospective eCHARGE merchants will need to ensure that they can make this model pay for them, although eCHARGE emphasise that they are prepared to discuss the optimal mix of these fees for specific situations.
The typical billing cycle is one month in duration. The telephone Carriers pays a remittance net of their fees approximately 30 days after the end of the billing cycle. eCHARGE pays each Merchant within 5 working days after receipt of the remittance total from the Carriers. ECHARGE also offers an optional receivables factoring program that can allow merchants to receive income on an accelerated basis.
The system is currently limited to US vendors and consumers although Canadian vendors can also sign up on the understanding that they can only accept orders from US customers. There are plans to increase coverage during 1998 to include consumers and vendors in Canada, the UK and Holland.
The following steps make up a typical eCHARGE transaction.
After the consumer locates a desired product or information service on a participating merchant’s Web Site, they elect to pay via eCHARGE by clicking on the eCHARGE icon. This causes a Web page with embedded JavaScript to be loaded and run on the user’s browser.
The JavaScript determines if the eCHARGE plug-in is installed on their computer. If the user does not have the eCHARGE plug-in, then the user is prompted to download and install it. The plug-in size is about 650K and should take between 4 and 7 minutes to download using a 28.8 modem. Once the plug-in is installed, the user continues the transaction.
When the plug-in is already installed, the JavaScript detects it and starts it automatically. The plug-in then begins the transaction by connecting over the Internet to the eCHARGE Billing System. Data files related to the product or service information requested are then transferred to the user’s computer in encrypted format. The plug-in disconnects the computer from the ISP and dials a 900 number that will connect the plug-in to the eCHARGE Billing System. Once connected, the call is charged and an encryption key is passed to the plug-in to unlock the data that was sent down.
See Also:
- The Insider Secrets to Marketing Your Business on the Internet
- Alternative Payment Solutions
- Fraud Prevention Tools
- Top Tools to Help You Boost Customer Service
- iV-Caller Verification Service
- Make Your Price Sell!
- FindWhat.com
- Make Your Knowledge Sell!
- HumanClick
- Netship
- iFulfill.com
- Nexchange
- Nothing But ‘Net
- Netwhistle.com
- Bigstep.com
- Make Your Site Sell!
- AWeber
- GoTo.com
- Constant Contact
- WebAdverts
- PersonalStore
- SiteInspector
- LinkExchange
- ClickTrade
- Safe
- eCHARGE
- MilliCent
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