Receiving payment for Internet purchases is still a challenge for companies with Web sites. Angus Kidman looks at the various methods being used.

Published in the Australian Financial Review, September 22 1997

So you've decided that it's time to begin buying and selling your company's products on the Internet.

The pressures of competition and the huge potential of the market -- Forrester Research predicts that trade on the Net will reach $US327 billion by the year 2002 - seem to present little alternative.

Your company already has its own Web page, so that hurdle is at least partly eliminated. But now you face a much bigger challenge: how are you going to collect money from your customers?

In the early days of Web transactions, there were two simple solutions to this problem, and these remain predominant today.

The first was to simply put a conventional order form on your site, and ask customers to print it out (perhaps after filling it out on screen) and then fax or mail it to the company. Many local Web sites still use this method.

Local wine information service, Wine On line (http://www.wineonline.com.au/), for instance, discourages sending credit card details other than by fax because of potential security problems.

However, such an approach fails to take advantage of the electronic potential of Web commerce and cuts off any buyers who don't have their own printers.

The second option was to allow users to send in credit card details via electronic mail, either via a form on the site or within the user's own e-mail package.

While this provides a higher level of electronic integration, the perceived security risk of sending credit card details via e-mail has turned off many customers and suppliers.

Some firms have modified the basic e-mail approach to make it more secure. One popular method, used by Queensland resort Turtle Cove (http: //www.iig.com.au/turtle_cove/) among others, is to provide an e-mail form for purchases but make the credit card details optional.

If a customer chooses not to include such details, the resort contacts them by phone to complete the transaction.

Similarly, the Peninsula Surf Centre (http://www.surfshop.com.au/) accepts only the original order via a form on the Web site, and asks for credit card information via an individual e-mail to the buyer.

Another variant, adopted by firms like CD Online (http://www.cd-online.com.au), is to use the in-built security features of browsers to authenticate transactions.

However, this normally requires additional hardware and software development, and still may not work in all browsers.

Some software companies, such as Australian firm Trumpet (http: //www.trumpet.com.au), have created secure environments for registering credit card details within their products, but this option is obviously not open to most businesses.

Ideally, both customers and businesses would prefer a system that worked on-line in all browsers, was highly secure and automatically authenticated transaction details.

It would also be helpful to eliminate one obvious problem with all the solutions proposed so far: they depend on the user having a credit card.

One possible solution to the last problem is to use the NetMoney (http://www.netmoney.com.au) service, which essentially collects funds for individual customer orders and places them on its own credit card.

Businesses can also join the NetMoney program for a starting fee of $100 a year.

But assuming you want to work with an existing financial institution, such as a bank, what are your options?

The most progressive provider of Net transaction services is the Advance Bank (recently merged with St George).

Advance offers an electronic cash (or ecash) service, open to any merchant with a Web presence; the software to create such a shop can be freely downloaded from Advance's Web site (http://www.advance.com.au). Participants in the bank's ecash program can also be listed in a virtual shopping mall located on the Advance site.

Current participants in the program include the Australian Business Bookshop (http://www.plusone.aus.net/) and a number of businesses operating in the Sofcom electronic mail.

The main restriction on this service is that funds collected from buyers can only be redeemed into an Advance account held by the business. Customers also need an Advance account and specialised software (known as a purse) to make purchases.

As well, customers are charged 2 per cent on transfers of funds into their ecash accounts, and 0.5 per cent on transfers from the account into the purse software.

Most of the other major Australian banks' announced electronic trading plans centre on the creation of secure credit card servers, which will authenticate transactions at the time of processing.

ANZ has announced plans to trial a system based on version 1.0 of the Secure Electronic Transaction (SET) specification later this year.

Ten major banks have also announced their support of the BPAY one-stop bill payment service, which plans to include Internet payment options.