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.

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