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The current dot-com shakeout has thrown a lot of assumptions—and many related financial arrangements—about how business is best conducted through the Web out the window. Amid the boom of exploding business paradigms, one assumption holds true: Without an effective financial service backbone, e-commerce cannot thrive. We dont have it.
Why not? The short answer is that our banks havent met the need. In fact, banks have lagged behind the rest of the economy, in part because they are by nature conservative.
The global payment infrastructure needed to transfer money between buyer and seller is based on obsolete technologies that do not allow for the real-time payments required by parties to online transactions.
At Huntington, a decade of work has, at least, resulted in a credible outline of the elements of such a system. Since the sine qua non of an electronic payment system is reliable identification and authentication of the transacting parties, we have worked with a number of partners to create an e-commerce company using multifunctional chip cards.
That company, Cybermark, has focused on solutions for universities and is now in use at more than 40 campuses across the United States. More than a million Cybermark card holders are connected to an intranet portal that provides a variety of services for students. We have also developed patents for settlement and clearing as well as a process for a national real-time XML-based payment system.
Access is exploding. Last year, there were nearly 5 million users of wireless financial services in the Asia- Pacific Rim region, along with 3.8 million in Europe, according to a TowerGroup report that projects 20 times that number by 2007.
So too is the volume of e-commerce exploding; its projected to increase into the trillions of dollars in the next few years.
Amid the whirlwind of change, one thing remains true: The establishment of a secure, reliable payment infrastructure must be a national and worldwide priority. How we make that happen is a critical subject of debate.