Euro-commerce poses web challenges

The euro, the European common currency that came into effect on yesterday, is expected to present both new selling possibilities and technical challenges for US-based Web merchants.

Support for the euro in cashless transactions, along with concurrent local currency transactions, will go into effect in France, Germany, Ireland, and eight other European countries. The adoption of the euro will take place over the next three years, with cash currency scheduled to be available by January 7, 2002.

For US-based Web stores that look to sell in Europe, having a single currency to convert to US dollars could potentially eliminate headaches, and could open up a large new customer base.

"Having the single currency taking off at the same time [that electronic commerce takes off] presents an opportunity for companies to present their wares over the Net with a currency denomination that, increasingly, a larger number of Europeans will recognise," said John Downe, euro customer programs manager at IBM in London.

However, many US-based stores are not moving quickly to adopt the new currency -- and this may later prove to be a strategically sound approach.

"We would love to be able to sell to this market, but much needs to be done before we can seriously consider or discuss this potentiality," said Scott Andrews, CEO and president of SciQuest, an Internet marketplace for scientific products in Research Triangle Park, North Carolina.

From a technical standpoint, one of the key problems in adopting the euro is addressing triangulation, whereby a product's price must be converted from the original currency into euros, and then into the country's completely separate local currency.

"You must triangulate your prices for products you want to sell through the euro," said Nick Ogden, managing director at Worldpay, a processor of online electronic payments and an international provider of merchant credit card facilities in Jersey, the United Kingdom. "A hard-line view is, if you do not do triangulation correctly ... you are actually breaking European law."

The concept of triangulation is not new, but it has been muddled with the introduction of the euro, according to analysts.

"Triangulation is a pain that Europe has always lived with -- it was just called 'currency conversion' before. I'm sure macros to make it easy will be knocked up pretty quickly," said Nick Jones, an analyst at Jupiter Communications in London.

Along with triangulation of the euro comes other issues, such as adding support for the euro symbol to systems and creating new bills of lading or receipts in both euro and local currencies.

However, observers said that the biggest issue facing the euro is a cultural one: Will Europeans adopt it?

"The key issue is to what extent the Europeans will actually use the euro. I hope it doesn't turn out like the metric standard in the United States, where it was a new standard that nobody used," said Brian Sroub, vice president of marketing at Beyond.com, an online software retailer in Sunnyvale, California.

"I think the problems will be human. Customers and the staff that processes orders will need time to become familiar with the currency. Humans need to be prepared for the euro more so than the systems," said Jupiter's Jones.

This may leave US-based IT managers pondering whether they should worry about supporting the euro now, later, or ever.

European analysts and financial experts admit that although support for the euro should remain on IT managers' minds, it does not have to be at the top of the list quite yet.

"You cannot sell effectively in Europe in US dollars. You need to present the information in the currency [Europeans] accept today, with the possibility of [a] new currency," said Worldpay's Ogden. "The cost to US companies to try to do that marketed education today is lost ... because people will not understand what 57 euros is, so they will not buy the product. They cannot ignore this, but the time frame for the euro is over and out [beyond] Y2K."

"I would almost guarantee that they will not lose business short term for not being euro-compliant, but I would plan to be euro-compliant by the middle to late year 2000 or 2001," Ogden added.

For more information on the euro, go to the European Union's euro site at www.europa.eu.int.

The following countries now support the European common currency:

Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain.

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