Entrepreneurship Secure Ordering Presented By Mrs. Bowden

Warm Up Read p. 69, 101, and 369

Today we will: Discuss and illustrate the process of placing secure orders and payments using online services from a customer and company perspective.

Accepting Credit Cards in E-Commerce Transactions Advantages Many people have credit cards Credit cards facilitate impulse purchases Consumer like to use credit cards online Protection against fraudulent merchants Provides merchants with information useful to marketing Disadvantages Costly set-up fees Must qualify for merchant status Not suitable for sales of downloadable soft goods Some customers do not have credit cards Some customers fear credit cards online High interchange fees for “card not present” transactions Chargebacks

Other Options for E-Commerce Payments PayPal No set-up fee, easy to qualify Easy to integrate in Web site Chargeback protection program Fee at most 2.9% of sale plus 30¢ 40 million users (good or bad?) Requires customer registration at PayPal E-Check Low fees: payments processed on ACH network Settlement faster than a paper check Can reduce merchant risk by guaranteeing payment (for a fee!) Requires consumer to enter bank and account information online Fewer consumer protections compared to credit cards Potential for consumer repudiation (chargeback)

Other Options for E-Commerce Payments Bill Me Later Instant “loan” invoicing Can increase sales and average ticket 30-40% less expensive than credit cards Signature debit cards Many consumers hold these cards Processed similar to credit cards but can have somewhat lower fees PIN-less debit cards Low fees Useful only to certain industries Checks (personal, money orders, cashier’s) Many consumers still prefer these options Can slow completion of sale if shipment is delayed until check clears

Security and privacy Micropayments Other Considerations Policymakers are concerned over ID theft and security breeches that facilitate online fraud Micropayments Single purchase sales for online content is becoming more popular (e.g., online music) Processing fees for established payment options are prohibitive for small dollar purchases Promising alternative: aggregation schemes