RealTime IT News

Analyst: Security Still Major E-Commerce Concern

Despite the huge expectations surrounding electronic commerce, major financial and security challenges remain to be addressed before e-commerce takes off, according to David Readerman, an Internet software analyst for NationsBanc Montgomery Securities.

"We are watching closely to see if the Internet is up to the task of taking on true electronic commerce," Readerman said. He defined electronic commerce as an "online exchange of payments," rather than simply the exchange of data.

Readerman spoke to investors in San Francisco last week attending NationsBanc Montgomery Securities' 15th Annual Technology Week investment conference.

Readerman focused his concerns about the Internet on its ability to handle secure transactions. "Authentication becomes really important on the Internet, since the buyers and sellers can't physically see or talk to each other. You've got to be sure the customer is who he says he is, and, for that matter, the customer needs assurance that the merchant is who he claims to be," Readerman said.

One of the challenges for companies hoping to profit from electronic commerce is that the current U.S. electronic payments systems already works well, Readerman said. For e-commerce to grow, it must offer merchants and customers a better value proposition at a lower cost, he said.

But the potential is vast, Readerman said, since there are $16 trillion worth of electronic payment flows and transactions in the U.S. annually, including $351 billion in consumer transactions per year.

NationsBanc Montgomery Securities, a subsidiary of NationsBank Corp., is a full-service investment bank and brokerage firm with approximately $800 million of regulatory capital.