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« September 22, 2002 - September 28, 2002 | Main | October 6, 2002 - October 12, 2002 »

October 05, 2002

Accenture: RFID - The Silent Commerce Imperative

Accenture's Institute for Strategic Change has recently published "Seize the Day: The Silent Commerce Imperative".
This 29-page study examines how companies like ExxonMobil,, Marks and Spencer, Ford Motor Company and others are successfully using radio frequency identification (RFID) to create new value for customers, improve the efficiency of existing operations and transform the supply chain. The report˜a collaboration between the Accenture Institute for Strategic Change and Accenture Technology Labs˜recommends that executives act immediately by beginning value-targeting, developing business cases and deploying pilots to help them gain the competitive advantages silent commerce offers.

October 03, 2002

PayPal: Merger with eBay closes

PayPaleBay today completed the acquisition of PayPal. Congratulations to the whole PayPal team! PayPal is the "shining star" example -- and a lonely one at that -- of a new emerging payments company that built significant shareholder value over the last couple of years. What PayPal did was truly unique. My hat's off to whole the PayPal team!

FMI: What food retailers should know about smart cards in the US

FMI has published a study on smart cards in the US and what they might mean for food retailers.
With the smart card industry turning its attention toward the retail sector, a host of questions are being raised. This paper will give a brief overview of how smart cards work, where they are being used, and how the emergence of smart cards might impact the grocery industry in the years to come.


Texas Instruments has a useful FAQ on its 13.56 MHz RFID products -- the core of the "near field communications" technology that Sony and Philips are talking about. Philips has a good discussion on the application of their RFID products to banking. The Digital Pusan Card is a newly released implementation using Philips' technology.

October 02, 2002

ComputerWorld: Sony, Philips and Near Field Communications

In early September, Sony and Philips announced they were working together to commercialize "near field communications" based upon RFID technology -- basically it's a personal area networking technology that will compete with Bluetooth.
The aim is to build a ubiquitous open infrastructure of NFC-compliant devices which effectively incorporate smart-key and smartcard reader functions, providing a convenient communication method for services such as payment (including credit card), ticketing, and accessing online entertainment content (e.g. gaming) through the devices. This can be done simply by holding devices or smartcards near each other. It is anticipated that the technology will play a key role in allowing content and service providers to offer various new ways of accessing their services. The consumer's primary NFC device (e.g. mobile phone or PDA) acts as a smart-key to gain access to chosen services from any NFC device, anywhere, anytime.
Bob Brewin reports on the announcement in ComputerWorld:
Cohen said Philips already has a leg up in the mobile payments industry due to the fact that Visa International Inc. in Foster City, Calif., already uses the company's Mifare RFID chip technology in its smart credit cards, which are widely used in markets outside the U.S. Joe Chouinard, vice president of Visa and co-president of the Mobile Payments Forum, which includes American Express Co., MasterCard International Inc., Visa and Tokyo-based JCB, said Visa and the forum wouldn't take sides in a battle of payment technologies for now. "We're device-neutral," Chouinard said, adding, "There's a number of technologies that might take off for [mobile] payments. But as far as we're concerned, the jury is still out." The forum, Chouinard said, is working to create standards that will support all types of mobile payment technologies.
Ed Sutherland reports on NFC -- and its eight inch transmission range. Web shoppers' new option: Bill me later

Troy Wolverton reports on CNET's about Bill Me Later, a new payment option for online purchasing being introduced by I4 Commerce.
The "bill me later" feature works much like a credit card, said Mark Lavelle, vice president of business development for I4 Commerce. After entering their billing address during the checkout process, shoppers click on the "bill me later" button. Instead of asking for a credit card number, the service asks consumers to enter their date of birth and occasionally the last four digits of their Social Security number, Lavelle said. I4 pays the merchant, then within 10 to 15 days after the buyers complete their initial transaction, I4 will send them a bill for all of their "bill me later" transactions during that time period, Lavelle said. They can either pay the full bill at once or pay a portion of it. I4 charges 17.9 percent interest on any outstanding balances, he said. Much like a credit card company, I4 will bill customers on a monthly basis.

September 29, 2002

Don Park: A market-based credit card system

Don Park discusses an idea he's had for a new, market-based credit card system where financial institutions would bid for each transaction or, more likely, each cardholder.
At the market, financial institutions bid for the transaction by matching the transaction's risk profile (sum of cardholder, card issuer, and merchant risk profile) with the institution's target risk profile. Some transactions are not live, meaning that they are old transactions returned to the market because transaction risk profile no longer meets original transaction owner's risk profile requirements (i.e. cardholder lost his job one month after he purchased a car). With today's technology, building multi-faceted risk profile in real time is not likely to be scalable. More realistic implementation will deal with cardholders instead of transactions; that is financial institutions bids and asks for the right to handle a cardholder's transactions.
A single institution system that's somewhat similar to Don's idea is Bill Me Later. Obviously, a single institution does not a market make -- but the idea of looking at each transaction in real-time and deciding whether to advance credit to the consumer is similar to the risk management approach that motivates Don's proposal. With Bill Me Later, in addition to the normal checkout information, the consumer provides her birth date as well -- which is used in conjunction with the address information provided to access online credit information to allow Bill Me Later to make a credit decision on the transaction. An FAQ on Bill Me Later focuses on the consumer questions about the system. Because there's no credit card information exchanged as part of the transaction, one of the benefits claimed is better security for both consumers and merchants -- the consumer's credit card information can't be stolen because it doesn't exist. Paymentech has a brochure on the Bill Me Later system which is focused on the benefits to merchants from adopting the system. In addition to enabling consumers without credit cards to purchase online, merchants also benefit from lower costs as Bill Me Later's merchant discount fee is lower than that of traditional credit cards. Bill Me Later is a product of I4 Commerce. Led by CEO Gary Marino, I4 Commerce has First Data Corporation and Paymentech as investors/partners along with Crosspoint Venture Capital. An August news report said that 20 major online retailers will begin rolling out the Bill Me Later payment option in the fourth quarter of this year. Bill Me Later is the first serious threat to the near monopoly that Visa and MasterCard (and their credit card issuing bank members) have had with respect to online purchases. Each transaction that moves down the Bill Me Later path -- and not the bankcard path -- results in no fees being paid to the card associations and, obviously, the loss of the credit relationship with the consumer -- which is the primary source of most of the revenue and earnings of credit card issuers. Of course, online purchases today represent only a few percent of consumer purchases so the immediate threat is small. On the other hand, most of the online purchase activity is concentrated into a relative handful of merchants -- so by signing up the top online merchants Bill Me Later can rapidly enter the market.


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