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Managerial Issues of Electronic Payment Systems

Some managerial issues related to electronic payments are as follows. 
1) What B2C payment methods should we use: Companies that only accept credit cards rule out a number of potential segments of buyers. Teenagers, non - U.S. customers and customers who do not want to use credit cards online are examples of market segments that are unable or unwilling to use credit cards to make online purchases.
 
E-checks, virtual credit cards, stored-value cards, and PayPal are some possible alternatives to credit cards. Also, when the purchase price is less than $10, credit cards are not a viable solution. In this case various e- micropayment systems can be used. Online merchants and other sellers need to be aware of the volatility and true costs of many of these alternatives. Because many of the various alternatives do not yet enjoy widespread use, it is always possible that they will not exist tomorrow.

2) What B2B Payment Methods Should We Use: Keep an open mind about online alternatives. When it comes to paying suppliers or accepting payments from partners, most large businesses have opted to stick with the tried-and- true methods of electronic funds transfer (EFT) or checks over other methods of electronic payment. For MROS, consider using purchasing cards. For global trade, electronic letters of credit are popular.
 
The use of e-checks is another area where cost savings can accrue. Finally, innovative methods such as TradeCard can be very effective. With all of these methods, a key factor is determining how well they work with existing accounting and ordering systems and with business partners.
 
3) Should we use an In-House Payment Mechanism or Outsource it: It takes time, skill, money, software, and hardware to integrate the payment systems of all the parties involved in processing any sort of e-payment. For this reason, even a business that runs its own EC site should consider outsourcing the e-payment component. Many third-party vendors provide payment gateways designed to handle the interactions among the various financial institutions that operate in the background of an e-payment system. Also, if a Web site is hosted by a third party (e.g., at Yahoo! Store), an e-payment service will be provided.
 
4) How Secure are E-Payments: Security and fraud continue to be a major issue in making and accepting e-payments of all kinds. This is especially true for online credit cards where fraud continues to grow. B2C merchants are employing a wide variety of tools (e.g., address verification and other authentication services) to combat fraudulent orders. These and other measures that are employed to ensure the security of e-payments have to be part of a broader security scheme that weighs risks against issues such as the ease of use and the fit within the overall business context.

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