Letter of Credit or the insecure methods of Documents on Acceptance or Cash Against Documents. However, the application of this concept to the purchase of goods will have to be studied in a separate model.

Feasibility

The modifications to present credit card systems that would be required are perhaps not too complicated or costly to implement for the bankers, considering the sophistication already achieved in on-line banking systems. The commercial feasibility and success of this concept, however, will depend on cost to the users. In an industry where transactions are numerous and profit margins relatively small (as compared to consumer industries) the traditional credit cardmerchant fee of a percentage of sales is not be feasible. Fees will have to on the basis of a fixed amount per transaction or as part of banking service agreements between bankers and their customers. However, where the credit card company guarantees payment by way of authorization codes, a percentage on the transaction might not be considered unreasonable.

The concept of this business-to-business account settlement utilizing a purchase card and merchant card system means the elimination of cheques and consequently enormous savings for all parties, not to mention a revolutionary advancement in business process.

Tony Young
President & CEO
Novonet Data Systems (Division of LCL Navigation Ltd.)

© Tony Young, Novonet Data Systems. All rights reserved.