Virtuelles Geld und Shopmarketing

Virtual Money

PPT and Script (PPT als Anhang fehlt noch)

I thank you for being here, albeit you don’t know what I will be talking about and even more important – you don’t know, if I know what I will be talking about.

I have a picture of the economy based on the Internet and I painted that picture for you with the colours of the future. I invite you to accompany me on a journey to the future of payment.

Why don’t we just wait, until the future comes? Because life is, as it always is: The future that is given to us, we have to create.

How far away is the future? The groundwork for this future is laid with the Internet and the iCommerce. We will start with the explanation of these termini to give you a firm basis.

You will see in a very clear and logical way the issues of iConomy and I introduce to you other virtual concepts, like virtual identities to fit the new innovation of payment into this new world.

On the home stretch of our journey to the future of payment you will see a nice garden. I will describe this garden Eden for you, if we still have time left.

We will talk about virtual money on the Internet. This is used in an economical environment I call iCommerce.

There are other I’s in discussion, like iBusiness or iConomy, but we focus on the trade and make a clear distinction between eCommerce and iCommerce.

Ecommerce has a long tradition. Since people transferred data, they were sending information with commercial content over the line. This is what I call eCommerce, since you don’t need Internet for this task. Internet is no prerequisite or conditio sine qua non.

For iCommerce the Internet is fundamental. Can you give me some examples of Businesses, that don’t work without Internet.

Now let us have a closer look at the businesses that have an outstanding performance on the Internet (Ebay, Facebook, Google, linkedIn, ….). What are the similarities in their business? What specifications do they have in common?

Interaction!

Sender like Radio or TV station, Newspaper, Speaker, Magazine, E-Mail,…

Now let’s have a look at the other distinct specifications of the Internet, that raises this medium high above all the other media we had before or still have:

When you apply this knowledge and ground your business on the specific advantages of the Internet you get into a very comfortable and desirable situation.

You know what increasing returns to scale means to your business?

Now we come to the point, where the money comes in – the virtual money.

Let us collect some other virtual phenomena on the web:

Give me some examples.

Virtual Goods: Internet Access, Marketing Fee, Software, digital Music, Videos, any kind of service provided over the Internet.

How are these goods mostly paid?

I will show you the following:

PPT 9: Evolution of Money

But since everything seems to be virtual, the process still remains real. If you are going to trade over the web, you have the following chain or flow of action.

PPT 10: Trading Flow

Now we come to the main difficulties or showstopper in Commerce over the distance – the distance trading. Every form of mail order business faces this challenge:

PPT 11 Acceptance

The sooner you pay, the better is the acceptance of the seller. With virtual goods you have a very special problem: You can’t take them back. The standard buying process distinguishes between the identification and the payment. You may identify with your credit card or any other certificate, but at the end the money is drawn from your bank account.

PPT 13

For trading purposes you need money only as an exchange medium, not as a storage for capital or a measurement for wealth as in the real economy.

PPT 14 Credit Card Clearing

The Credit card companies are doing a hard job to identify the person that wants to clear a payment over the Internet (fraud problem)

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Credit Card Payments

Four Parties

Buyers

Buyers receive several benefits. First, the credit card payments are convenient. Secondly, credit card payments offer a line of credit. The line of credit varies with the different card types – credit cards, charge cards and debet cards.

The Buyer pays for this services a fixed annual fee plus charges for debt. Buyers weigh up the benefits of using a particular credit card against alternative forms of payment.

Sellers

There are some direct benefits that Sellers receive from having credit card transactions. First, there is a convenience benefit of being able to have transactions processed electronically. Secondly, there are security benefits to credit card transactions. Sellers are protected against fraud and Buyer credit risk for card transactions, so lang as they have carried out the required security procedures.

They have to accept the rules otherwise they can not play.

The „price“ of offering credit card facilities involves a mixture of annual fees, provision of a payment infrastructure and per transaction Seller service charges paid to acquirers. In addition, the Seller must often abide by rules that require it to honour all cards of a given association, ensure verification of a card’s validity, and also to not charge a surcharge to cardholders.

Issuers

Issuers sell credit card services to Buyers. They are essentially the providers of any credit and are ultimately responsible for debt collection from Buyers. As part of the credit card system, this meens that issuers must offer guarantees to acquirers that debts will be honoured.

Essentialy, the acquirers are agents of the issuer in offering credit card terms to Sellers and, ultimately, Buyers.

Issuers face costs associated with processing card transactions and also associated with the risks of providing credit to Buyers. In return for these services, the issuer is able to charge Buyers for the use of the cards – annual fees and interest payments – or bundle card provision with benefits elsewhere as part of banking functions. In addition, issuers receive payments – interchange fees - from acquirers.

Acquirers

Acquirers are, basically, responsible for encouraging Sellers to join a particular association and accept its cards.

The risks involved in acquiring are substantially less than those for issuing. In credit card systems, issuers are really the financiers and acquirers their agents in dealing with the Sellers. Nonetheless, their role is primarily one of marketing and then processing transactions from Sellers.

Acquirers earn revenue from the charges paid by sellers for various services but also must pay interchange fees to issuers.

Buying Process

With this in our mind let’s have a closer look at the buying process. The merchant has to respect the rules of the issuer, otherwise he will have no guarantee for the payment of his goods and services.

Tell the rest of the story

In the internet business he can not fulfill the requirements, because this is no face to face business. So actually, what does he get from the credit card company? He gets nothing except of the identification of a possible buyer. The other services of collecting the money and transfer it to his account is nice to have, but worth only a few cent of transaction fee.

We want to keep this in mind: the best service he can get is the identification. For this service he pays the disagio. This is far too much fee for nothing.

What happens in “real economy” when a payment is processed?

PPT 16

Virtual money can offer a better service, when dealing with partners that are already identified.

If you look to the process of transferring money between bank accounts, you see the difference. Banks don’t charge you nothing for the transfer of money. They do not charge one another any fee, when they transfer money between bank accounts. Imagine what huge amount of virtual money is turning round the financial systems all around the world.

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And now let me explain, what banks fear, especially central banks. If someone takes real cash out of the system and changes it to internet cash, it is disappeared. Why? Because internet is not constraint to banks and it is international. You can establish internet cash from every place in the world and for the use of everywhere in the world.

The central bank has no information of any kind what happens inside the internet.

Remember the picture from the beginning of my lecture. You get a glance of the economy inside the net. We will only take a look at the money system. This is a little cutout of the virtual economic world. This world has

virtual goods
virtual identities
virtual money
virtual accounts

Now we can reduce the payment system and the payment process for virtual money to the core.

PPT 18 Payment system

Stripped to the bone, the process for trading virtual goods with virtual money:

PPT 19 payment process

We know what happens inside the internet. Inside the internet is iCommerce – and this is a world of its own. Inside the internet we operate with virtual money, that means somebody can take care of this, control it and define the rules.

He has to establish a simple clearing system.

PPT 20 Inside

Can everybody see the outstanding strategic position that this clearing center is able to occupy?

O.K. you saw the strategic position, but the outstanding strategic position comes from the fact, that banks fear the „no man’s land of iCommerce“.

Let‘s analyze what we found out till now, what the rules and the advantages of virtual money are:

PPT 21 Rules

Can this concept be successful? Are there players in the market, that have the power, the identified partners (users) and the network to operate a clearing center?

Let’s have a look and let your phantasy fly:

PPT 22 Stages to Success

This are the overall advantages of virtual money:

PPT 23 Advantages

Do want to have a look in the garden Eden? Do you have enough time to listen and work this out with me?

PPT 24 Gesell