Although security concerns keep many users from buying online, a recent survey found that 90 per cent of online business-to-consumer transactions are completed with a credit card.
The Strategis Group's 183-page report, "Electronic commerce: Internet payment systems", states that credit card security remains a key concern to those who conduct business online. And it continues to be the biggest hindrance to e-commerce, although it is no more dangerous than giving a credit card number over the telephone.
As account-based checking and electronic cash systems begin to spread, users will most probably shift to these new methods of payment systems, said Matt Page, a Strategis spokesman.
"Credit cards will continue to be used for larger online purchases of hard goods -- such as books, music, and clothing; whereas the account-based systems will probably be used for smaller purchases -- most likely of Web site content, such as buying articles from a news site," Page said.
Dual-purpose platform systems -- which process transactions partially on- and offline and handle credit card purchases -- are the most popular payment systems for online shoppers, according to the study.
Other popular forms of dual-platform transactions included electronic checking, electronic funds transfer and third-party payment models which use a PIN to represent a user's credit card number.
In order to relieve security concerns, many businesses are beginning to adopt and to test the secure electronic transaction (SET) protocol. According to the study, the amount of time it takes to process these types of transactions is a key deterrent to their adoption. To alleviate this, businesses have begun to add Secure Sockets Layer (SSL), a transaction mechanism that speeds service delivery.
There are also other impediments slowing down the rate at which e-commerce is adopted.
While the Clinton administration is fighting to keep Internet commerce tax-free, the National Governors Association is supporting the taxation of the Internet -- and Internet commerce providers are awaiting the outcome, Strategis said.
Also, Internet-based payment system providers are facing a fluctuating, relatively new marketplace, Strategis said. They are in direct competition with firmly established transaction, Internet and computer companies, including Hewlett-Packard, VeriFone, Compaq Computer, IBM and GTE. Other key findings of the report include:
* Internet usage is more prevalent among middle-income and lower middle-income classes.
* Seventy-eight per cent of Internet users access the Internet from home, and 46 per cent of these go online once per day.