UK banks are holding back small and medium-sized businesses from entering into ecommerce, by refusing to let them clear credit card transactions online.
'This is the most important reason for the slow take-up of ecommerce in the UK' said Gavin Breeze, managing director of credit card payment gateway DataCash.
Small and medium businesses at the Interforum E-Connect 99 conference in London last week spoke with one voice when they complained about the banks' lack of flexibility.
Their complaints followed a call to action by keynote speaker Barbara Roche MP, who said UK small firms must take up electronic business or risk other countries stealing their business. 'If our small businesses don't seize the market, our competitors will', she said.
'The one big disabler to ecommerce in the UK is the attitude of the clearing banks,' said Brent Hoberman, founder and managing director of Last Minute Network.com, which offers last-minute travel, gifts and services over the Internet.
To accept online credit card transactions, businesses must be granted a 'merchant ID' by a card-acquiring bank. The largest acquirers are NatWest and Barclays, which control nearly 80% of the market.
Last Minute has deals with 14 of the world's major airlines, as well as travel agents and gift retailers.
Hoberman said he approached major credit card acquirers including Barclays, NatWest, Lloyds TSB and HSBC. None would grant him an ID because of his lack of trading history, and because Last Minute does not own any of the products or services it sells.
Hoberman told Computing: 'We've had thousands of transactions and not a single case of fraud. I don't see where the banks think the risk is.'
Banks need to adapt and be more creative, he said. 'We offered to put money in a deposit account to mitigate the risk, but they wouldn't even accept that. There are too many Kafkaesque layers of bureaucracy.'
Should a firm go out of business, any bank which issued it an ID will be liable for unfulfilled card purchases. A NatWest spokesman said the bank deals with every case individually, and has no blanket policy on who it will not deal with.
However Breeze said: 'We convert only 5% of those who apply to us to do credit card trading. The banks are declining the rest of the applications.'
Ron Turner, of manufacturing sales agent Ron Turner &Co, said: 'I have been waiting two and a half years to get my business off the ground because of the banks' refusal to let me do this.'
Turner was hoping to act as an agent for a group of manufacturers on the Net, but now feels this is not possible.
From Computing 17 June 1999
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