In our last blog we discussed the advantages of Online Payment Systems (OPS) however some of the advantages are the very same reasons people shy away from using OPS. It is much easier for younger generations, Y & Z Generation, to embrace change and seek the benefits of using innovative technology. The Baby Boomer Generation on the other hand has the concept: if it’s not broke then why bother to fix it. Older generations would rather take the extra initiative and time needed to travel to the store to make their purchases. As well as spend the extra money for postage to send a check to make their bill payments. Can you blame people for not fully trusting what they cannot see? Have you ever given thought to the downfalls of OPS or are you just trusting that things will work as they are suppose to? Below we will examine a few of the negative aspects of using Online Payment Systems.
Cons:
Online Security: When we check out at a merchant and use our credit cards we must present photo ID. However when making online payments there is no real authentication process to verify that the person entering the information online is not a criminal. Without this verification process time becomes of the essence when it comes critical to dispute a fraudulent charge made using your credit/debit card because research is needed to prove your case.
**It makes sense to some to invest 20 minutes to drive to the location to make a purchase using check or cash rather than waste 1-3 days to dispute a charge because someone gained their credit card information.
Missed Errors: Can you imagine being in business since 1970, each time you needed to replenish inventory you contacted your supplier with whom you have a personal relationship to place your order. The supplier delivers your goods in a timely fashion. Upon delivery an invoice is provided and you either pay COD (cash on delivery) or mail in your payment. Now 21st Century technology is presented; you submit your order online which requires payment before delivery. Once the goods arrive you realize you mistakenly order the wrong material. Now you have you merchandise that cannot be used and you are out your money. More time is now needed to return the “unnecessary material” to wait for the replacement order to arrive. For many people the old way was more efficient.
Fees: Management courses have taught us that there is an opportunity cost for every choice we make. Surprisingly, OPS are no different. During the Introduction of Info 3130 we learned that the overall objective of Information Systems is to reduce operational costs. Since the core business of many organizations is not IT based and more specifically not specialized in Online Payment Systems an outside vendor is required to provide the online payment services. An Online Payment Systems vendor like PayPal requires the merchant to pay a convenience fee ranging between 2.2%-3.9%. Would it be beneficial to use their services as opposed to alternative payment methods? For corporate organizations this fee may prove to be inconsequential. However, for the small business owner these fees could equate to astronomical figures eating away at the bottom line.
I’m sure you’re thinking to yourself, you only identified three negative aspects of Online Payment Systems therefore the Pros outweigh the Cons. However, many of the Pros center on convenience. Do you think convenience is more important than security and preserving profit? If you have a moment, please share your negatives experiences with Online Payment Systems and see if they align with the 3 major downfalls identified above.
Sources:
Laudon, Kenneth C. and Jane P. (2012) Management Information Systems: Managing the Digital Firm. (Twelfth Edition)
“Internet Payment Systems- Advantage, Cost, Online Payment Options, Security Efforts.” Reference for Business: Encyclopedia of Business, 2nd Edition. 9/30/2012
< http://www.referenceforbusiness.com/small/Inc-Mail/Internet-Payment-Systems.html>
"Disadvantages of Internet Payment Gateways." Transactmoney. 9/30/2012
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