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Credit cards pose online commerce obstacles

December 21, 1999
Web posted at: 11:17 a.m. EST (1617 GMT)

by Ephraim Schwartz and Michael Lattig


(IDG) -- Although this shopping season promises to be merry for IT organizations, infrastructure glitches appear to be moving upstream to credit card authorizers and bandwidth providers.

NetMarket Group, an e-tailer of general merchandise, did everything it could to prepare for its second season of online commerce, spending more than $1 million to scale up its capabilities.

"We came into the season [having completed] a shopping readiness analysis [of everything] from network infrastructure and capacity to communications lines," said Bill Graham, vice president and general manager at NetMarket, in Stamford, Conn.


However, NetMarket officials did not plan on their systems timing out due to a dramatic slowdown in credit card authorizations.

"For billing and authorizations, we have had to adjust our time-out parameters [to accommodate] an extended wait period of up to one and a half minutes," said Graham.

A client services specialist at CyberCash, a Reston, Va.-based payment provider, acknowledged that CyberCash was part of the problem, saying that authorizations have gone from being completed in under 30 seconds to taking as long as one minute.

The specialist said that, although there are dedicated lines between CyberCash and the authorization providers, that is not the case between merchants and CyberCash. <> "Our servers time out after about 360 seconds. The merchants need to have their systems matching or less than that. You would have to reconnect or reinput your credit [card transaction] after that," the client services specialist added.

ISPs are also facing slowdowns that may continue to plague commercial customers due to the heavy traffic; in one recent case an unpublicized AT&T outage in O'Fallon, Mo., brought down 180,000 circuits. It caused delays in credit card authorizations of more than 3 minutes.

"That [AT&T fiber-optic] line powered about 600 T1 lines," the CyberCash specialist said.

Although long lines and even credit card delays in a store may not affect the bottom line, delays can be more detrimental to online retailers, according to Barry Parr, director of consumer electronic-commerce research at International Data Corp., in Mountain View, Calif.

  InfoWorld home page
  Report shows that credit agencies behind tech curve
  Credit crunch for e-comm wannabes

"When you're in the mall, facing a human with a purchase in your hand, you're a lot less likely to drop those items and move on to another store," Parr said.

One solution to the wait is for e-commerce companies to deploy a direct connection with companies such as Visa and American Express, rather than rely on third-party providers. But only a handful of companies can afford to do that.

"It is expensive to build this kind of capacity for one month a year," said Marc Perl, director of market readiness in the year-2000 global program at Visa International, in San Mateo, Calif., and a member of the InfoWorld Corporate Advisory Board. is one company that has not been affected by slow response times for credit card authorizations, company officials said.

"It's fair to say that some people wondered why we were investing $300 million in our infrastructure, but I think this year is showing that it was the right thing to do," said Bill Curry, a spokesman for the Seattle-based e-tailer.

Sony considering creation of Internet bank
December 13, 1999
Microsoft opens Windows to smart cards
November 19, 1999
Gov't to test online ATM Cards
November 18, 1999

E-tailers look to retain customers
Y2K, funding and credit cards are states' top e-commerce challenges
Report shows that credit agencies behind tech curve
Credit cards become virtual with eCharge
Credit crunch for e-comm wannabes
(Network World)
E-commerce: Major source of credit fraud
Top e-shops lack privacy protection
(PC World)
Entrust secures transactions on wireless units
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