Using Cash For Online Purchasing

As Canada’s first online cash payment system, HyperWallet gives consumers an alternative to credit cards, and opens the door to increased growth in E-commerce.

The credit card is the payment of choice for consumers making online purchases. Shoppers are comfortable with this payment method, they’re accustomed to making purchases this way in regular retail stores and they appreciate its convenience. According to a study by the Aberdeen Group, credit cards are used for approximately 90 percent of online purchases in North America. Nevertheless, the uptake of online shopping has been gradual. According to Ipsos Reid’s Canadian IT review, just 35 percent of Canadians have made a purchase online. Many E-commerce experts contend that the use of credit cards for online purchases is the barrier that hinders growth of E-commerce. The core of this belief lies in lack of consumer confidence in online credit card security. Consequently, vendors are introducing alternative online payment services in the hopes of revitalizing the E-commerce market.

One such alternative is a product called HyperWallet [http://www.hyperwallet.com], the flagship product of Twin Lion Systems, located in Vancouver British Columbia. The product is Canada’s first online cash payment system and as such, offers tremendous opportunities for online purchasing.

According to Twin Lion, "HyperWallet is a true virtual wallet - an online cash solution to facilitate electronic purchasing and person-to-person (P2P) payments." To use it is simple - the consumer logs into their online bank, they transfer cash to their HyperWallet and then spend it online. Funds can also be transferred to the HyperWallet through telephone banking, an ATM or through a teller, and cash can be distributed via e-mail to friends. All that is required to set up an account with HyperWallet is a password and username.

“E-cash is a generic term that bounces around in definition and is really going to be out of favor in our opinion,” said Victor Jones, President of Twin Lion Systems. “HyperWallet is a product that uses real cash – real Euros, real pound sterling, real Japanese yen.”

Jennifer Cameron, Vice President of Operations with Twin Lion, supports this view. “HyperWallet is a lot simpler [than any e-cash option] as it is backed by government issued dollars. The driving force behind it is the belief that you can’t really have an online community or an online marketplace without having the most fundamental component of transacting in place, which is cash. So, my personal feeling is that E-commerce stalled out for a while because it was missing this most elemental component.”

As consumers become better educated about the Internet, they are beginning to look for different payment mechanisms that will provide improved privacy for personal information, increased security from credit card fraud and lower costs. As a cash-based system HyperWallet provides these benefits. Since consumers are paying with cash, it is not necessary to store personal information on a company’s server (only shipping information is required to make a purchase), which means there is never any risk of fraud or any charge back, interest, or usage fees. The HyperWallet system also enables customers to make small purchases, which credit card billing systems are not well suited for.

To illustrate this point, Jones explained, “If, for example, you have a business in Toronto which is offering games for kids to play online, you wouldn’t want your kid with a credit card trying to go and play those games – filling in all that information. On a HyperWallet basis that same child can go to a games site and can send five bucks from his or her HyperWallet to the game site and play a game. All that’s received from the game company is a certification that those funds have been paid and they cannot be repudiated.”

Another advantage is that HyperWallet gives businesses the opportunity to reach 100 percent of consumers wishing to make online purchases, since even consumers without a credit card can use the system - giving merchants or banks access to a large and growing demographic market, namely 16 to 24 year olds.

In addition to enabling smaller purchases, HyperWallet allows customers to make larger payments. “We’ve moved over $30,000 in a single transaction through the system,” said Jones. “We cover a range of payments. The simplicity of HyperWallet is being able to make easy payments without having to divulge personal information, which is typical of all other sorts of credit card based processors.”

Not only are consumers’ eyes being opened to the possibility of more secure, safe, efficient, and low cost online buying alternatives, but merchants and banks are also opening their doors to alternative online payment methods to increase the economic benefits E-commerce can bring to their customers.

“All financial institutions are looking at ways to be cost effective, save money, do more things online, and provide users with a wider range of payment alternatives,” explained Jones. “We may be a small growing company within an industry that is populated with huge elephants, but there’s no doubt in our minds that there will be continued and gradual growth in the use of online payment services and alternatives. And that’s where we position ourselves.”

There is also enormous opportunity for alternative online payment systems internationally, particularly in the wireless market. “Many regions have leap-frogged the online area and gone wireless much more rapidly than perhaps the United States,” according to Jones. “Growth in wireless applications in the Pacific Rim region is absolutely phenomenal. In Asia, online business-to-consumer revenue more than doubled in 2000 reaching 6 billion across the region. They forecast a yearly increase of 36 percent in the number of people online in the Asia Pacific region…certainly there are some huge opportunities for wireless applications.”

Recognizing the opportunities in global markets, Twin Lion Systems has been invited to make introductions and strategic partnerships in Australia, Japan, and Korea. Jones said, “There are certainly global applications for our service. HyperWallet is a wireless application protocol system-one that you can already use on a RIM device.”

So, while it’s true that consumers are primarily using credit cards to pay for purchases online, there are plenty of opportunities for alternative online payment systems like HyperWallet. After all, if consumers want the convenience they are accustomed to for making purchases in regular retail stores - what could be more convenient than using cash?