Wednesday, February 25, 2009
Ecommerce: A New Artform
What creative project do you have in the back of your mind? Writing that novel? Putting together a bluegrass band? Painting the sunsets over the Rio Grande? How about starting a business?When you think of the term creative endeavor, does launching or running a business come to mind? To most creative people, business is the antithesis of creativity. Yet slowly, ever so slowly, the nature of business is changing. The need for innovation in business is gradually overtaking the need for control as the resource that makes the difference between success and failure.Really? But isn't business essentially about control? Controlling resources and controlling people? Yes, but business is also about innovation and communication, both of which live at the heart of creativity.There are two reasons why I believe creativity will become increasingly valued in business. Control is certainly critical in business, both resources and people need to be managed carefully. But control is easier to teach than innovation. Given an equal need for both innovation and control, control is the easier skill or talent to find and implement. Thus innovation rises in value because it's more difficult to find and utilize effectively.Are innovation and control equal needs? They certainly haven't been in the past. Control has been the leading force in business since the beginning of the industrial age. That age has ended however, and we now live in an service-based information world of commerce. This means the resource that needs to be controlled is more likely to be information rather than, say, coal. Information can be managed easily across electronic wiring and storage media. That means important work of business will be creating and disseminating information, and that requires a creative mind.The other reason I believe creativity will rise in importance in business is that in our information-based economy, the resources required for business are fewer and less costly. If you can run a storefront on the Internet that can reach millions across the globe, you don't need capital to build a store that sits in a city and reaches thousands. The
juice it takes to make the Internet company successful is not capital so much as the creative ability to reach and build a customer base over an infrastructure that's effectively free.Napster was a wonderful example of this. A teenager was able to create a service that was quickly utilized by millions upon millions of users. Of course Napster had a glaring flaw: the company was trading in products created by others, and trading without the consent of those who produced the products. But the heart of the matter is that someone without substantial resources could build a highly-used, well-recognized brand out of little more than a creative idea. Using the same infrastructure, surely someone will come up with another intriguing idea that will capture our imagination and a big audience, and it will probably happen soon. And the next wave of creative Internet entrepreneurs will have learned from the Internet crash and its aftermath.The Internet isn't dead. It's just stumbling a bit while taking its toddler steps. Internet start-up ideas will continue to attract creative people, simply because the free infrastructure invites innovation and resists control. Control is the deathword to creativity. Creative people have shunned business for that reason alone. Yet in a world where creativity and innovation become the critical elements for success, you bet creative people will begin to see commerce as an avenue of expression.During the high days of Internet exuberance, I used this column to make the claim that business will be the creative medium of the early 21st century. I still believe it's true, simply because the basic elements still exist a encourage a creative approach to business. The resources to support a new company do not require control so much as creative manipulation. Given this free and open canvas, creative people will rush in, despite the lingering notion that business is somehow anti-creative.
About the Author
Rob Spiegel is the author of Net Strategy (Dearborn) and the upcoming Shoestring Entrepreneur's Guide to Internet Start-ups (St. Martin's Press). You can reach Rob at spiegelrob@aol.com
Ecommerce 101 – Online Credit Card Processing
Back in 1998 (through 2000 or so), I worked for a small company (called PaymentNet / then Signio) that handled online transactions. Verisign later purchased this company, and the product team I led integrated the "client" - the portion that took the credit card information and sent it to our servers for processing. The product name is Payflow Pro - maybe you've heard of it?
I'm going to limit this discussion to Visa / MasterCard credit cards -- Amex and others operate slightly differently.
First, there is the bank that the consumer’s credit card is attached to. That bank is called the "acquiring institution" ... it handles the "credit" you have on your credit card.
Then, there is the merchant bank. That's where the business opens up a "merchant account" to be able to accept various forms of credit cards.
The merchant account is connected to another company called a "processor". This "hidden" layer is the company that actually moves the funds from the acquiring institution to the merchant account (that process is called "settlement"). The processor also handles talking to the acquiring institution to make sure that the customer has the funds available (a process known as authorization).
Some well-known credit card processors are First Data Merchant Services (FDMS). Nova and PaymentTech.
Sitting on top of the processor is one of two primary systems either a swipe-card terminal (like those you see in Wal-Mart) or a "gateway" company that does basically the same thing, but over the Internet - that's what Verisign Payment Services and Authorize.Net do.
Note that the waters are even muddier in many cases, for example, Wells Fargo can act as every piece of the puzzle in some circumstances.
So, what actually happens when you purchase something at Wal-Mart using a credit card?
a) You place your items from your "basket" onto the counter and scan them. the checkout system provides a total.
b) You swipe your card through a "terminal", which reads the # off the magnetic stripe.
c) Wal-Mart dials their processor, and asks if you have the funds available on your credit card. The processor talks to your bank (the acquiring institution). If funds are available on the card, they are marked as "held" in your account (an authorization) -
if not, the transaction is declined (yuk). Authorizations that are never settled tie up your credit card funds for a period of time, usually 10 days or so.
d) At the end of the day, Wal-Mart marks all the transactions they want to receive funds for, and submits them to their processor in a "batch". The processor then contacts the acquiring institutions and transfers the funds to your merchant bank - which may make the funds available instantly (in a day or two), or may hold them for a while, or may hold the funds in a "rolling reserve" (keeping some funds held back in case a consumer fights the transaction, called a chargeback).
In the online world, replace the cash-register with an online shopping cart, and the electronic credit-card with terminal with called a "gateway" such as Payflow or Authorize.Net. the process is basically the same, with slightly more complexity.
My site, CommerceStore.com handles the entire "shopping cart" and storefront process, including talking to the gateway. It knows how to talk to every major gateway (online credit card terminal) available. In addition, we have direct relationships with various banks that can help you open a merchant account in the US or in Canada, and the system works with PayPal. There's a whole lot more, including AutoResponders, built-in affiliate system, etc.
As a merchant, all you really need to know is that all services purchased through CommerceStore.com will work together. Be careful going "a-la-carte" with ecommerce credit-card services: if the gateway you chose can't talk to the processor your bank uses, or your software can't talk to the gateway, you're hosed. That situation was MUCH more common (things not working together) back in the mid/late 90's than it is today. However, most “brick and mortar” banks (like your local branch) still don’t have a clue about online credit-card processing … if they attempt to sell you a “leased terminal”, it’s best to run the other way and find a solution from reputable online source.
Nick Temple is a former engineer for what is now Verisign Payment Services. He can be reached at his website, http://www.nicktemple.com. He is part-owner of the CommerceStore.com complete ecommerce solution.
I'm going to limit this discussion to Visa / MasterCard credit cards -- Amex and others operate slightly differently.
First, there is the bank that the consumer’s credit card is attached to. That bank is called the "acquiring institution" ... it handles the "credit" you have on your credit card.
Then, there is the merchant bank. That's where the business opens up a "merchant account" to be able to accept various forms of credit cards.
The merchant account is connected to another company called a "processor". This "hidden" layer is the company that actually moves the funds from the acquiring institution to the merchant account (that process is called "settlement"). The processor also handles talking to the acquiring institution to make sure that the customer has the funds available (a process known as authorization).
Some well-known credit card processors are First Data Merchant Services (FDMS). Nova and PaymentTech.
Sitting on top of the processor is one of two primary systems either a swipe-card terminal (like those you see in Wal-Mart) or a "gateway" company that does basically the same thing, but over the Internet - that's what Verisign Payment Services and Authorize.Net do.
Note that the waters are even muddier in many cases, for example, Wells Fargo can act as every piece of the puzzle in some circumstances.
So, what actually happens when you purchase something at Wal-Mart using a credit card?
a) You place your items from your "basket" onto the counter and scan them. the checkout system provides a total.
b) You swipe your card through a "terminal", which reads the # off the magnetic stripe.
c) Wal-Mart dials their processor, and asks if you have the funds available on your credit card. The processor talks to your bank (the acquiring institution). If funds are available on the card, they are marked as "held" in your account (an authorization) -
if not, the transaction is declined (yuk). Authorizations that are never settled tie up your credit card funds for a period of time, usually 10 days or so.
d) At the end of the day, Wal-Mart marks all the transactions they want to receive funds for, and submits them to their processor in a "batch". The processor then contacts the acquiring institutions and transfers the funds to your merchant bank - which may make the funds available instantly (in a day or two), or may hold them for a while, or may hold the funds in a "rolling reserve" (keeping some funds held back in case a consumer fights the transaction, called a chargeback).
In the online world, replace the cash-register with an online shopping cart, and the electronic credit-card with terminal with called a "gateway" such as Payflow or Authorize.Net. the process is basically the same, with slightly more complexity.
My site, CommerceStore.com handles the entire "shopping cart" and storefront process, including talking to the gateway. It knows how to talk to every major gateway (online credit card terminal) available. In addition, we have direct relationships with various banks that can help you open a merchant account in the US or in Canada, and the system works with PayPal. There's a whole lot more, including AutoResponders, built-in affiliate system, etc.
As a merchant, all you really need to know is that all services purchased through CommerceStore.com will work together. Be careful going "a-la-carte" with ecommerce credit-card services: if the gateway you chose can't talk to the processor your bank uses, or your software can't talk to the gateway, you're hosed. That situation was MUCH more common (things not working together) back in the mid/late 90's than it is today. However, most “brick and mortar” banks (like your local branch) still don’t have a clue about online credit-card processing … if they attempt to sell you a “leased terminal”, it’s best to run the other way and find a solution from reputable online source.
Nick Temple is a former engineer for what is now Verisign Payment Services. He can be reached at his website, http://www.nicktemple.com. He is part-owner of the CommerceStore.com complete ecommerce solution.
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