BT plans to extend pre-paid card services for Internet shopping.
BT has transplanted the concept of pre-paid services currently used by mobile phone operators to online shopping. BT’s offering will allow customers to purchase a card that will convert cash into eCash via its ATM network. The value of the card is stored in a central server and is retrieved when a customer enters the card number and PIN at BT-enabled eMerchant sites. BT’s breakthrough online payment offering eliminates two obstacles for eCommerce: safety concerns and the young’s inability to pay. Datamonitor’s IMPACT survey revealed that over 55% of those consumers ordering but not paying online cited fears about payment security as their key concern. Pre-paid cards offer a payment solution to under 18’s, a segment of the population that is very disposed to shopping online but unable to obtain a credit card.
BT has targeted an attractive audience. However, the problem is not with the audience. The problem will come from merchant uptake. The current scenario is that credit cards, for all of their inadequacies, are the easiest way to pay online. Other payment methods such as ePurses, or smart card-based payments using smart card readers have failed to take-off, despite their ability to address safety concerns. The main reason has been limited levels of acceptance of these methods, both on and offline.
From a consumer’s point of view, BT’s offering provides a simpler solution compared to existing methods. For merchants, the value proposition is far from original. BT therefore will have to focus its efforts in making its solution palatable to eMerchants by offering competitive merchant service charges and a simple payment settlement system.
