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Payment: Online A Reliable Mechanism For Collectiion
by B.Muthukrishnan

Whenever Internet transactions are discussed, immediately the thought of credit card comes to everybody’s mind. This is because in US the payments by credit cards is quite common. Even before online purchases have become popular, normally purchases are made through credit cards only. Therefore in US there was no problem in making people to switch over to online purchases as this mode of payment is already in vogue. Even in US, much discussion is going on as to how to avoid frauds, misappropriation, etc of credit cards once the card number is given online to a merchant. Encryption technologies. Secure socket layers, etc are being introduced to avoid such things .In spite of all these measures, still reports keep coming regarding credit card frauds here and there. In other words, there is no 100% foolproof to make credit card payment a safe mode of payment.

In other countries, where credit cards payment system is not as popular as US,online shopping through credit cards resulted in great failures. At least in Singapore, a mega shop had experienced a fraud of huge magnitude and decided to suspend immediately their online business. Similar stories are not uncommon in other countries too.

Scenario in India

In India the situation is far from satisfactory to use the credit cards as a means of making payments for online purchases for the following reasons;

  1. Use of credit cards is popular to only a few thousands of executives, businessmen ,etc from big cities.

  2. 2.That any person using credit card is liable to declare IT made many people surrendering their cards. In other words if credit card is made the payment mechanism, only IT payers will be eligible to buy goods online.

  3. 3.Still many leading credit card companies are yet to install their infrastructure to process the online payments.

  4. 4.Then there is the question of sales tax laws Each State has its own rate of tax structure for each and every commodity. How to charge tax when a transaction takes place online and at what rate will pose problems of billing.

  5. 5.Many establishments do not like to offer credit card facility due to the service charges to be paid to cr card companies .They get the payment only after a certain period of time once the goods are sold. Both of them make the profit margin less.

    As mentioned earlier, the fraud element is applicable to India also. In view of all these factors, in India; Use of credit cards cannot be expected to boost the sales of online sales, particularly business to customer

Then what is the way out?

There are other methods of payments for Indian online business, which are given below:

  1. Payments by electronic cash/ cheque may be made legally valid including electronic signature .I BELIEVE once the cyber laws are passed by GOI, this is possible.

  2. Each merchant/shopper can allot a secret code number to the existing clients (customers).On receipt of this code number, the goods can be despatched by VPP and other modes of despatch, which will ensure collection of payment against delivery .However, this facility can be extended only to existing customers.

  3. Banks should be asked to immediately create necessary facilities for any of the a/c holders to operate the a/c through online. Once a purchase is made, the a/c holder can transfer the required amount to the merchant A/C online. The MERCHANT BANK CAN INTIMATE the shopper about the transaction. All these activities can be carried out instantly though proper programming.

  4. Activity (3) can be made part of the ordering activity.

  5. Large organizations can issue authorization letters to each of their employee who want to avail the online purchasing facility and device a mechanism through which the merchant is paid his dues by the company itself. This would require installation of transaction servers in the companies or can be integrated with their online business activity.

  6. Similarly all government establishments can device a mechanism to enable their employees make online purchases.

These are all some of the ideas to make the online purchases easier and smoother without affecting the payment due to the shoppers. They may look difficult to achieve but with proper programming techniques and the use of appropriate servers , they can be easily achieved.

In conclusion, payment through credit cards will not result in increasing the online shopping as generally believed. We need to device different mechanisms taking into account Indian laws, shoppers requirements ,banking practices prevalent in our country.

Understanding E-Commerce
Payment Online
E-commerce vs. Commerce

Copyright © 1999 Dr. Raj Mehta. All rights reserved.