Friday, December 05, 2008

Credit Crunch Affecting E-commerce? No, Just Pay With Cash...

The credit crunch is certainly biting and consumer credit will soon be feeling the pinch even more. Egg, the credit card supplier, withdrew cards from 161,000 customers recently and it has been reported in the press that over one trillion dollars worth of credit will be withdrawn from card holders through various banks soon.

What will this do for the online e-commerce sites? To pay with Paypal you have to have a bank account and, generally, a credit card as I understand it so could we see online sales dipping for the first time since we all went online?

The reality is that the gloabl slowdown is bound to affect sales, but an interesting concept has been developed over the pond that could aid online shops in their efforts to allow access for customers; paying online with cash..

No, we won't suddenly be having a coin-slot on our laptops but an enterprising company has created a payment system that allows users to get a virtual credit card for use on the web.

Yep, a virtual credit card. has developed a system that allows you to pay cash into a Western Union to a specific number which then generates a code, go back to the site and you are delievered your virtual credit card replete with number, svc code, expiry date and name.

We have seen the rise of the pre-paid debit card and now, I am sure, we will be seeing the rise of the online virtual card.

The leap from offline to online cards is a natural progression and it may be a signal that 'virtual' payment methods are on the rise, the technology for which has been talked about for many years, such as mobile phone payments etc.

Of course, this particular business has started during the 'perfect storm' for such methods. Bad economic conditions, lack of credit and massive discounts in online stores.

It remains to be seen how succesful the business is and, currently, it is only available in the US, but as ideas go it is very well timed and, judging by feedback I have had from people who have used the system, it is very well executed.

This may be just one of those ideas that was in the right place at the right time.

Just remember, you heard it here first.

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