Electronic Currency Homework

["John Kim" <johnkim@hawaii.edu>]

1. General Question: Consider what (in your opinion) is preventing the
revolution in currency models from occurring? Why is the dominant internet
transaction model the same (credit-card clearing) as in the face-to-face
commerce world?

I believe, the reason why there isn't an online currency revolution is
because one, there is an inherent barrier related to security and faith in
transactions.  The technology hasn't progressed to the point to really
minimize fraud and increase faith.  Furthermore, the new models, seem to be
different forms of older one.
Credit card clearing is the dominant transaction model, for a many reasons.
It's the prefered method in the e comerce world, because it's has such a
huge base in the face to face comerce world.  Regardless, of online shoping,
consumers will most likely have a credit card.  Likewise regardless online
store front, a buisness will find it easy for to utilize the services of
credit card merchants.  Furthermore, because of its history, consumers have
a certain level of faith in credit card and crdit card companies.


2. The average cost of an article in Northern Light's "Special
Collection" is one dollar.

a. What is their billing policy?
b. Why do you think Northern Light set-up their billing policy in that
fashion?

They imploy a micropayment method, where they charge you a small amount of
money but bill you in a lum sum fashion.  You basically make purchases until
you total $20 or the 28th of a month, which is when they bill you.
Micropayments is an easier way for them to sell online.  They're goods cost
only a $1.00.  With merchant fees: For every transaction you make, the
credit card company charges a flat fee.  By keeping a tab, you minimize the
number of transactions, therefore, minmize the amount you pay in transaction
fees.

3. The electronic wallet is intended to make internet shopping easier.  List
an advantage and disadvantage for both the consumer and the merchant using
an electronic wallet:

Pros:  Its convience.  The concepts of the ewallet is great, make it as easy
for the consumer to make a purchase online.  It convienently stores all the
neccessary purchase option information to make online purchasing as simple
as possible.
Cons:  Its filled with technicall problems, which in the end don't make
online purchasing easy.  One, major annoyance is the compatibility issue
between different ewallets, and how web sites implement the technology.
Another problem is security of your hard earned dollar.  How attractive is
it if you had the possiblitly of losing money because your hard drive
crashes, or why would a consumer want to exchange their hard earned dollars
for online scripts.