Abstract
The Internet has changed the way we interact with others in both our business and personal spheres. Electronic commerce has developed beyond buying and selling of goods electronically. It is now leading to new online intermediaries such as aggregators of information, peer-to-peer and social networking sites which allow sharing between individuals without the need for commercial service providers, and new on-line payment mechanisms such as BPAY in Australia, which provide additional services to those from existing credit providers. Using a case study approach, this chapter explores the factors that have led to the success of financial intermediaries and in particular, BPAY Ltd.
TopBackground
Given the relatively recent development of electronic commerce and banking, there have been only a few studies on the success or otherwise of electronic banking intermediaries. A study by Kniberg in 2002 found that a payment system1 will generally have eleven characteristics; security, ease of use, cost, credibility, range of payment amounts, speed, ease of joining, pervasiveness, credit, economic model and personal integrity which will determine the success or failure of the system.
The success or failure of a payment system will be influenced by the value or benefit of each of the characteristics to the consumer and or the merchant or biller (Kniberg, 2002). Kniberg concluded that a successful payment solution is more likely to have developed from building on an existing billing relationship between a company and its customers (Kniberg, 2002).
Kniberg also found that many payment solutions failed due to the fact that they focused too much on security. Trust is arguably more important to users and merchants than security. Users and merchants are more likely to use an ‘insecure’ (as judged by Kniberg) payment system from a trusted company, such as Visa, than a secure payment system from an untrusted or unknown company (Kniberg, 2002). Other than trust, a payment solution may succeed or fail on the basis of pervasiveness, ease of joining, ease of use, transaction costs and transaction speed (Kniberg, 2002).
Key Terms in this Chapter
Payment System: Refers to a system that is used to settle financial transactions or to transfer funds between financial institutions.
Electronic Bill Payment: Refers to a payment via the Internet for goods or services using credit, debit or electronic transfer of funds.
Financial Intermediaries: Refers to a third party which is typically a financial institution that facilitates a financial transaction between two other parties such as a supplier of services or products and a customer.
BPAY Ltd: An example of a financial intermediary that facilitates bill payments between customers and suppliers.
Case Study: A research method that can be used when to investigate the how and why of ‘a contemporary phenomenon within its real-life context’ (Yin, 1994, p.13).
Electronic Commerce: Refers to the buying and selling of products and services via electronic systems such as the Internet.
Australia: The geographical location of the research