It is several years since the larger Post Offices in Britain adopted SQMS (Single Queue, Multiple Server) as a mathematically superior technique for minimising the time that customers have to wait to be served. Department stores and supermarkets have been slower to follow suit, however, and it is still very unusual to find this approach to customer service taken up in practice by the retail sector.
In its own way, that reluctance on the part of retailers to reduce delays - often exacerbated by customers' credit cards being authorised over a heavily-overloaded telecoms network at busy periods will prove to be one of the drivers for stimulating the growth of purchasing over the Internet. But before that additional demand can be realised, however, merchants have to be confident that there is a safe and reliable route by which they will be paid for the goods and services supplied to customers who can be anywhere in the world. Apart from a small number of account holders making regular purchases from the same supplier, virtually 100% of the transactions will require payment by 'plastic' of some description. The merchants need to have in place a means of receiving a broad spectrum of credit card and debit card payments securely through their Web Site.
Typical of businesses starting to trade over the Internet, the UK electronic publishing company Mondaq required a method of collecting payments for the information services it was providing. DataCash was established in 1997 specifically to meet that demand, expanding to take on board its first commercial client two months later. What emerged is a business dedicated to handling payments over the Internet, and which integrates fully with Microsoft's electronic commerce architecture. The DataCash Payment Gateway is a combination of an online service and a suite of software modules that acts as a real-time payment mechanism for transactions over the Internet.
All credit or debit card transactions involve a commercial relationship between the card acquiring institutions and the merchant. The risk to the card acquiring company is roughly the same over the Internet as it is with conventional retail or telephone sales. As a pre-requisite for becoming a client of DataCash, therefore, a supplier of goods or services must be accepted as a merchant by one of the card acquirers contracted with the transaction processing company. In practice, a vendor which is already established as a card-accepting merchant should have little difficulty in extending its operations to the Internet.
Having cleared that particular hurdle, the merchant is ready for the DataCash front-end module to be downloaded on to its Web site supported on Microsoft Site Server. The software is integrated with the Site Server platform through a Component Object Model (COM) interface; the API of the Site Server environment. The role of DataCash is to check the validity of the card details entered by the customer and start the process which ultimately transfers funds to the bank account of the merchant. As part of the transaction, customers enter the details from their card. With DataCash acting as a bureau for handling this information, the data is transmitted in an encrypted format over the Internet to the DataCash server, a 'black box' which hosts the core module of the system. The customer data is converted into the format required for APACS (the Association of Payment and Clearing Systems) before being passed over a wide-area X.25 data network to the financial institutions involved in card authorisation. For the concept to be viable in practice, the DataCash Payment Gateway had to win the support of the card authorisers. Having the banks work with a third party in this way was not ground-breaking as UK institutions have a long history of accepting transaction data from external systems under controlled conditions.
As a result, the system has been approved by - and is permanently online to - the card services operations of The Royal Bank of Scotland, National Westminster Bank, Barclays Bank, Girobank and American Express. Perhaps more relevant to the customer is that the credit cards which can currently be processed for authorisation through DataCash are VISA, MasterCard (and EuroCard), American Express and JCP. On the debit card side, Switch, Solo, VISA Delta and VISA Purchasing are supported. All transactions are authorised, confirmed or rejected in real time. The names of the card service operations accepting transactions from DataCash might suggest that the company can serve only a British customer base, while the Internet implies trading without boundaries. Gavin Breeze, the company's managing director, set the system in its international context. "The system operates independently of the currency in which the merchant and its customer are working so that there is effectively no restriction on the vehicle used for any particular transaction.
"DataCash is a Multi-Currency system which allows vendors to trade in 155 currencies, and have funds credited to their account in one of sixteen currencies. It would mean that an authorised merchant could sell goods in French Francs, for example, while having the exact amount credited to its US dollar account. Nothing gets lost in conversion charges along the way."
Closer examination of the DataCash system architecture would suggest that there are few limits on the type or size of business which it could support. Operating as a module within the supply chain mechanism, the application should be able to run with simple commerce-enabled sites at one end of the scale, through to fully integrated solutions. It would be possible, for example, to have the customer's order trigger a production run at the merchant's manufacturing plant, and progress the order automatically through to delivery. Given that Microsoft Site Server must be installed on the merchant's platform, however, and that there is a £5,000 licence fee for that product, some of the smallest commerce-enabled sites would probably find it difficult to justify that particular cost.
Breeze accepts that view, but believes that a business generating about £2,000 worth of business over the Internet each month would be the entry point at which the service becomes viable. DataCash's Merchants are charged a flat fee per transaction, which would suggest that, at the lower end of the scale, the kind of business which can take advantage of the DataCash facility would be one where the £2,000 turnover is generated from a comparatively small number of transactions rather than 1000 purchases at an average of £2. The company's MD takes the point, but maintains that the solution is cost-effective with transactions involving as little as £5.
Another factor which would mitigate against the smallest vendors taking up the service is their acceptance by the financial community. Many businesses seeking to trade over the Internet cannot demonstrate the copper-bottomed trading history sought by the banks as a hedge against risk. This constraint, however justified it may be in commercial terms, could limit the growth of Internet-based trading. Is there scope for DataCash itself to act as an intermediary in the process, assuming the risk inherent in the small businesses it may wish to take on board as merchants?
This option has already been explored by the company, though with little success. "We suggested that if we could secure suitable insurance cover, we could act as the middleman and therefore allow any customer we regarded as a viable operator to become an eCommerce merchant. The idea fell on deaf ears amongst the card institutions, who no doubt saw the move as a loosening of their own grip on the merchant relationship. This is a classic case of the infrastructure being able to support a development, but the business culture not being ready to accept it."
These logistical considerations apart, the threshold which DataCash has set is very modest. DataCash could therefore expect a considerable demand for its services as consumer purchasing over the Internet increases. As a relatively small operation based just south of the Thames in London, the company would soon be stretched beyond its resources if it were marketing the payments solution directly. DataCash has opted to work through a number of Microsoft solutions channels - a mixture of developers and independent solution providers to which the transaction system is a complementary module.
Conceived to run as a bureau service taking in transaction requests from its merchants, the DataCash Payment Gateway can be sited anywhere in the network. There would be no reason why that capability should not be located on a merchant's own premises if the throughput of transactions warranted the investment inherent in a managed server.
Even at this early stage in its development, DataCash has been exploring another route for 'delivering' its transaction service. The key to the company's IPR lies in the 'black box' which was operated in the first instance as a bureau service, accepting transaction traffic over the Internet from merchant sites.
As Gavin Breeze explained, provided there is sufficient traffic to warrant the investment, there is no reason why a version of the bureau machine should not be co-located with the Microsoft Site Server platform on the merchant's premises. "On present costings, a designated merchant handling more than 100,000 transactions per month would see a benefit in housing the managed switch.
"As the demand for Business-to-Consumer increases, a higher proportion of merchants may take that option. We have been approached by one institution with a view to handling two million transactions a month - an indication of the way that the market is moving."
The investment that DataCash has made in its Gateway technology and merchant server modules has wider applications than transaction capture and verification. One potential growth area identified by the company is the handling of direct credits and debits between businesses. This process differs in several important respects from the remote consumer making a purchase over the Internet, however.
Where credit card transactions have a built-in buyer identification number, and the merchant has an agreement with its bank to be a supplier, business-to-business transactions are more complex: the purchaser's bank needs assurances that the instructions which it has received to make a payment are from a legitimate supplier. A module developed by DataCash generates the digital signatures which verify the transaction to the satisfaction of the parties concerned.
MD Gavin Breeze has already established that transactions from £5 upwards can be handled economically. But there is a large swathe of business below that limit which has a need for the kind of transaction processing capability which DataCash could offer. Business information services are the prime example, with customers drawing down small 'slugs' of data at a time.
DataCash has extended its product range to cover this type of micro-payment and is supplying the service to publishers such as Telegraph Newspapers, Guardian Newspapers and the Dialog Corporation. The customer pre-pays a sum of perhaps £200 - accounting for just one card authorisation enquiry - and DataCash handles the deductions charged by the subsequent micro-transactions.
A logical development of that process is Pay-per-View where the cost of each viewing is deducted from the sum lodged with the merchant. DataCash has launched a module specifically for this kind of application.
DataCash is not unique in providing a transaction processing module for integration with Microsoft Site Server. Its claim to originality today lies more in the method it has adopted for converting the customer data and passing this through the card authorisation process. Without tempting fate in what is set to become an intensely competitive environment, the company's policy of diversification meeting a spectrum of payment requirements should stand it in good stead as Internet trading takes hold and the retail trade finds its queues getting shorter - but for all the wrong reasons.
For more information please contact:
The DataCash website: Click Contact Link Contact: Gavin Breeze DataCash Tel: +44 (0)171 820 7733 Mobile: +44 (0)370 752 563 Email: Click Contact Link
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