The Rules of E-commerce Have Changed

Click here to download the complete whitepaper.

Introduction

Ecommerce rules have changed.

In September 2011, both Visa® and MasterCard® launched their own digital wallets as mobile payment (m-payment) applications for smartphones equipped with NFC chips. With the introduction of these two applications, the rules of e-commerce have forever changed for both the bricks and mortar retailers and online merchants.

On the surface there does not appear to be a real advantage for retailers to adopt the new hardware required to be installed at the cash register. There are more significant advantages to the online merchants and the businesses that offer online sales.

Consumers concerned about identity theft will need to know that the new digital wallets are guaranteed to protect their identity. The safest place to store credit card details is with the bank or institution that issues the credit card. The second safest place to store profile and card data is in one of the cloud computing services designed specifically for that purpose. After all, they already have this information.

The new digital wallets will be fully functioning Personal Point of Sale devices (PPOS). They will not only provide all the functions of existing retail Point of Sale devices, but will also provide several new levels of security and identity protection.

Initially, the PPOS is being deployed to interact with e-commerce enabled websites. The shopping cart applications will no longer ask for any information from the consumer. The software will simply generate a transaction number that will be pasted into the PPOS.

New Rules Protect Consumers

Doing business online can be an alarming situation for both merchants and consumers. Merchants are concerned about fraud, chargebacks, high discount rates, and being sued if someone steals data from them. Consumers are concerned about identity theft.

It seems to us, the solution to both problems is the same. The consumer never gives the merchant any data that can be stolen. In reality, the merchant never needs the consumer’s identity or card details. The merchant only needs confirmation the credit or debit card was approved. If that is all the merchant needs, then why does current shopping cart software ask for so much more information that could be deemed to be confidential?

The new PPOS will guarantee:

 

1. The User is, in fact, the owner of the PPOS.

2. The Merchant is, in fact, the operator of the website and duly accredited.

3. The Service works with every merchant account provider.

4. The Service operates across all web-based applications that accept credit cards.

5. The Service will work with an ever-growing collection of smartphone applications.

6. The Data collected within PPOS is secure.

7. The off-site data storage facility, or facilities, allows for data retrieval in the event the smartphone is ever lost or stolen

 

New Rules Protect Merchants

The prime concern of all online merchants is cost. The PPOS will be treated as a card-present sale, so its use will reduce discount rates, lower incidents of charge backs and help to fight fraud. In addition, merchants will no longer need to purchase SSL Certificates, additional firewalls, or secure Payment Card Industry (PCI) compliance. The average online merchant, with 150 transactions per month at $86 each, will save over $2000 per year.

Once implemented, the PPOS will be the basic building block for the further enhancement of a merchant’s advertising and marketing efforts, as more merchants turn to the deployment of smartphone applications tied to the PPOS to promote sales and build customer loyalty.

In summary, here is an overview of how the PPOS processes online purchases. A consumer visits a website, selects the items he/she wants to purchase and adds the items to the shopping cart. When the consumer selects the check out feature, he/she proceeds to the payment area of the website where he/she is presented with a number of payment options.

When the consumer selects the CQRpay button:

 

1. The shopping cart software generates and uploads to the processing gateway, a file containing the merchant identification, as well as the invoice details.

2. The shopping cart software receives confirmation from the gateway that the transaction was received, displays a transaction number, and then closes the invoice.

 

At this point the merchant has an open unpaid invoice with no knowledge of the consumer’s identity.

 

3. The consumer then opens the PPOS and retrieves the transaction number.

4. The PPOS displays the identity of the merchant, the invoice number and the invoice details, as well as a number of payment options.

5. The consumer selects the payment option and processes the payment.

 

Once the transaction is processed:

 

6. The PPOS displays the authorization number and saves a record of the transaction.

7. The gateway then sends the authorization to the merchant to complete the transaction.

8. The merchant may choose to send an e-mail confirmation to the consumer.

 

The same file, passed to the transaction processor, can also be read by the smartphone application specific to the needs of the merchant. For example, consider how a hypothetical grocery chain might take advantage of the methodology employed with the PPOS. Assume the retailer provides a smartphone application and offers a loyalty card. The invoice file passed to the consumer at the time of purchase could include additional information, including the ability to alert consumers of upcoming events, specials, coupon offers, etc.

Let us assume this grocer includes a meal planner as part of their smartphone application. The consumer can plan meals for the week, select main course items based on the grocer’s advertised specials, and receive suggestions regarding additional ingredients such as seasonings, vegetables for the meal, etc. The app may then offer recipes, appetizer suggestions, beverages to include, and perhaps a dessert selection. Over time, the app could track shopping habits and remind the consumer of purchases made in the past, such as milk or sugar, or whatever the household has purchased on a regular basis.

To register as a merchant and to download the application programming interface (API), click HERE.

Click here to download the complete whitepaper.

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The September 2019 AML/KYC Tracker Report provides an in-depth examination of current efforts to stop money laundering, fight fraud and improve customer identity authentication in the financial services space.

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