I just returned from an eCommerce graduate school at Boston University (BU), which was designed to educate and challenge attendees on the evolving world of payments.
I believe that one of the most interesting aspects of this "New World" of payments is the language that is developing around it, which I have arbitrarily dubbed "eSpeak." This development is more than simply a fascination with acronyms, but rather it is taking the communication on this subject to a mystical level. Itís like creating word puzzles which you will need a secret decoder ring in order to understand..
I will illustrate this point by providing you with the schoolís opening presentation. It was an introduction for eCommerce and given in eSpeak by a BofA1 employee.
We all know that the driving forces in eCommerce2 are PCs,3 the www,4 eyeballs,5 and site stickiness.6 Some think that this is aided by EFT997 (which was supposed to have been completed two Web years8 ago) and hindered at the moment by Y2K9, but our collective futures will clearly be filled with electronic FX10 24/711
According to NACHA,12 BAI,13 and others, the future will be filled with FEDI14 (for billers who can quantify a ROI15), EBT,16 EBPP,17 and a number of forms of EFT,18 including more use of ATMs,19 RCK,20 and ECC.21 Some are concerned that pilot programs are creating more questions than answers at the moment, like how to explain to a consumer calling their RDFI22 about a Web-originated eCheck23 when the payee produced a Reg. J24 paper check, which was later ECPed25 by an ODFI,26 how the transaction will appear on their statement.
Aside from the obvious learning curve by both banks and non-traditional players and some legal infrastructure changes, we can expect more ACH27settled transactions originating from the POS.28 In fact, the only real concerns are about evolving UCC29 and the legal framework for handling collections and prosecution on NSF30 items which moved from payment type to payment type, and for pure Web transactions, finding a way to validate the ID31 of businesses and consumers, perhaps using their URL32 or through some level of public/private key cryptography.
Of course, consumers have had heightened concerns about fraud, but use of SSL33 or other security should be more than enough to calm these nerves. All three of the consumer concerns noted above can be mitigated with the use of eCash34 as an alternative payment method, but it too will need more infrastructure and standards development, which will almost certainly create coopetition.35
Now I know that many of you followed that, while others are thinking that this is nothing short of disintermediation from common sense and effective communications. We all know that the direction for payments is open, electronic, choices, immediate, international and commoditization, and that the world that we are leaving is of course closed, paper, limited, several days long, domestic, and differentiated.
Okay, while we may not yet know where eCommerce ideas or the jargon are going to take us, I find it comforting that the rest of the world is taking our industry in stride. For me its IHOP in the morning and KFC at night, and "Paper". Ah, the simple pleasures.
Editorís Note: Now that I am done having fun with "terminology," and how difficult understanding the changes occurring in the payments industry can be, I also want to show how a subject can be illuminated and made understandable with some talented writing, and a desire to simplify. The following overview and explanation of the subject of Electronic Bill Payment and Presentment by H.R. Damon Gonzalez, Jr., GM, Internet Financial Services, Financial Services Industry Marketing, Enterprise Computing Group, Compaq Computer Corporation, is a wonderful example. I believe you will find this story interesting and useful to your on-going industry knowledge.
1 Bank of America. 2 Electronic Commerce or payments without paper. 3 Personal Computer. World Wide Web or the Internet. 5 Consumers online. 6 The web site content, which is compelling enough to bring consumers back to the site again. 7 The January 1999 Federal Mandate to pay electronically and not by paper check, which is 78% complete as of June 1999. 8 A Web year is two to three months. 9 The concern over the past software practice of using two character dates, and how to properly identify dates after the year 2000. 10 Financial Exchange of information. 11 Twenty four hours a day, seven days a week. 12 National Automated Clearing House Association. 13 Bank Administration Institute. 14 Financial Electronic Data Interchange, where both information and payment are part of the information exchange. 15 Return on Investment. 16 Electronic Benefits Transfer. 17 Electronic Bill Presentment and Payment. 18 Electronic Funds Transfer. 19 Automated Teller Machines. 20 Redeposited Check, a payment code for the collection of a paper check through the ACH system. 21 Electronic Check Conversion, a process of capturing the account information at the time of sale, and collecting the item through the ACH and handing the paper check back to the maker. 22 Receiving Depository Financial Institution, or the bank on which the payment is drawn. 23 Electronic check, which can be a payment by the government thorough a closed payment system, or the replacement of a check at the point of sale or conversion of the item to an ACH item, or in some cases banks have advertised Visa branded debit cards as electronic check. For these purposes, and in the context of the Internet, MICR data collected by phone or Internet producing a Reg. J draft. 24 Federal Reserve Regulation J, which among other things permits an authorized unsigned draft to be processed with payor approval. 25 Check truncation at the bank of first deposit, called Electronic Check Presentment. 26 Originating Depository Financial Institution, or the bank, which receives and forwards payment to RDFI. 27 Automated Clearing House. 28 Point-of-sale. 29 Uniform Commercial Code, or the uniform state law that has been adopted uniformly. 30 Non-sufficient funds. 31 Positive Identification of a payor. 32 Universal Record Locator or web address. 33 Secure Sockets Layer, a 128 bit encryption method. 34 Electronic small value payments, perhaps stored on a smart card or stored-value card. 35 The combination of cooperation and competition
