To date, the development of a true electronic equivalent of cash has been hampered by a lack of infrastructure and standards. Today, only a limited amount of electronic commerce is actually being paid for on line. Virtually all of those payments that do occur on line are conducted using credit cards. Credit cards have drawbacks, however, that limit their use for broad Internet e-commerce. Credit card use remains limited to consumer retail transactions and small corporate purchases.
Many consumers continue to be reluctant to use their cards on-line.
Privacy concerns may be an important part of this reluctance. Part of the reason for the continued reliance on paper may be that no Internet payment mechanism has been developed to date that is both safe and secure and that can carry related transaction information along with the payment. The growth of electronic bill presentment and payment also has been slow for consumers. Although several high profile efforts to develop consumer electronic bill payment systems have been launched, the market has not yet found a viable model that meets the needs of both billers and consumers. The challenge to the existing financial services industry is to stay relevant in the midst of innovation.