Business Case Analysis 'Electronic Payment Systems in Action ...

Business Case Analysis 

‘Electronic Payment Systems in Action’ 

Business Proposal 

To: 

Movie Gallery Inc 

On the introduction of E-payment System 

By: 

Anthony Claret Onwutalobi 

Department of Computer Science 

University of Wollongong Australia 

Codewit Global Network 

© Copyright 2006 All right Reserved 

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EXECUTIVE SUMMARY 

In the off-line world, it is customary to see consumers use cash, checks, and credit cards to 

make purchases 1 . (Efraim Turban, 2004) This practise may be too slowing, inefficient, or 

expensive for online transactions. Let us consider Movie Gallery Inc, the second largest 

North American home entertainment specialty retailer, with 4,700 stores, where its 

customers usually buy or rent movies at any of their stores. You could see that nearly all 

customers usually buy movies and pay with cash, or if someone rent movie from their store 

with discount, they are likely to use credit card. 

To bring itself into the changing face of movie rental, movie Gallery launched 

Moviegallery.com through a separate subsidiary. With its large and diverse geographic 

spread, Movie Gallery had not yet implemented any online DVD rental service. For this fact, 

there is no room for making payment online. This scheme rule out a number of its potential 

segments of buyers’ like non-US Customers and some other customers who do not want to 

use credit cards for small purchase. Moreover, a good number of these users are also likely 

to be teenagers, and have less access to credit and debit cards (e.g.; for renting movies online 

or purchasing single movie or playing an online game) Therefore, it become imperative that 

a special payment method for Movie Gallery customers need to be developed that will cater 

for their online payment. These schemes may be referred to as e-payments (electronic 

payment) system. 

Virtual Smart Team is an experience small company that prides itself in building Electronic 

Payment Systems for any e-commerce business that want to survive the online competitive 

market. This report will serve as a proposal to Movie Gallery Inc, containing full details of 

how an Electronic payment System will help them retrieve most of their lost target market 

segment. Owning to the fact that Movie Gallery Inc. has a wide geographical coverage and 

1 Efraim, K.J., et al “Electronic commerce: A managerial Perspective”. Electronic Payment 13, no. 493 

(2004) 



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most of their rental services and sales might also involve monetary values that might be too 

small for credit cards (micro payment) (e.g.; renting one video set or playing an online game). 

Our experience team will develop an effective and efficient e-payment system that can cater 

for such micro payment without loosing focus of the head cost for both the buyer and seller. 

Base on our expertise, the e-payment system that we are recommending for Movie Gallery 

Inc is Electronic-wallet (e-wallet) that is software specifically design for online payment. This 

software is well suited with Electronic commerce and legal system that are currently in 

existence; and does not require complicated and expensive hardware or software. 

The main purpose of this report however, is to enlighten Movie Gallery Inc on how the 

whole system will work, ranging from its optimum security to anonymity of the buyers and 

educating them on its unrivaled benefits and advantage. 

To achieve this however, this report will give details of the technology proposed and how it 

will be useful in the Movie Gallery world. In addition, the reason for the choice of 

technology will be justified including the benefits and hurdles of the system with future 

improvements and recommendations. Besides this, detailed projected two years financial 

information to support our rationale will be carefully documented to forecast of its projected 

success and benefits in the ongoing market, with details on financial constraint that Movie 

Gallery Inc might encounter while using the technology. To capture all this essentials 

however, we will employ SWOT analysis and marketing plan to enable us have an overview 

of the system interoperability and how best to capture the potential targeted segment. 

Lastly, we will predict the future of this technology and how the system can be improved, 

and expanded for the benefit of the customer. 



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COMPANY HISTORY AND BACKGROUND 

Movie Gallery, Inc. is the second largest video specialty retailer in the united state, which has 

more than 4,700 stores and 20, 000 associates in 50 states in US and in seven Canadian 

provinces and Mexico. 

Movie Gallery was established in 1985 by 

Joe Malugen and Harrison Parish in 

Dothan, Alabama, United States of 

America. At first, it only focused on rural 

and secondary markets areas that were 

typically underserved by other video 

retailers, notably Blockbuster Video. By 

focusing on rural and secondary markets, the company is able to compete very efficiently 

against the independently owned stores and small regional chains in these areas. Through its 

wholly owned subsidiary, M.G.A., the Company's founders began operating video specialty 

stores in southern Alabama and the Florida panhandle by franchising the Movie Gallery 

store concept. Movie Gallery grew through the acquisition of various mom-pop video stores. 

(Franchising model) but they eventually repurchased all of these franchisees. 2 

Movie Gallery grew biologically for the balance of the 1980s and the early 1990s. After that, 

it began an aggressive growth movement in the early and mid 1990s by strengthening the 

fragmented video retail market through the achievement of individual video stores and small 

chains. Besides that, the company also continued to expand by opening several new stores in 

many places. 

2 –(n.a), (2006), About Movie Gallery [web page], http://www.moviegallery.com/company/about.aspx, date 

accessed: 1 March 2006 



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In July 1994, Movie Gallery went public and used the proceeds of the initial public offering 

(IPO) and successive secondary offerings to continue its vivid expansion. From 1996 

through 1998, Movie Gallery focused its attention away from expansion and toward fine- 

tuning internal aspects of the company. Owning to the fact that it grew through a 

corporation of different stores, the company focused on implementing the movie Gallery 

culture and philosophy. The goal is to absorb all different movie stores and differentiate 

Movie gallery from the other movie rental stores. 3 

As Movie Gallery continued to expand and grow, it acquired stores in most of the United 

States. Towards the end of 1999, Movie Gallery launched moviegallery.com through a 

separate wholly owned subsidiary. 

By 2001, Movie Gallery won the honor of retailer of the year (large chain) from video 

software dealer Association 4 (Braxton M and A. J Strickland, 2005) 

Movie Gallery owned and operated stores in five Canadian provinces, which gave the 

company an international presence. According to Braxton M, Movie Gallery’s annual 

revenue by the end of 2001 had surpassed $369 million (Braxton M, 2005). 

It took over Video land (a video store) in the year of 2002. Moreover, Movie Gallery 

continues its aggressive expansion. However, Movie Gallery had not implemented any online 

DVD rental service, and most of its potential segment, customers are not covered but with 

its large and diverse geographic spread, we will introduce an e-payment technology that will 

suit it entry into the online rental industry. 

THE PRODUCTS / SERVICES 

3 – (n.a), (2006), Movie Gallery [web page], http://www.answers.com/topic/movie- 

gallery, date accessed 1 March 2006 

4 

Braxton M. A.J, et al., “Crafting and Executing Strategy: The quest for competitive advantage, concept & 

cases Movie Gallery 13 no. c-38 McGraw-Hill Irwin 14 th edition (2005) 



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Movie Gallery focused on countryside and secondary markets areas that were typically 

underserved by other video retailers, especially Blockbuster Video. Movie Gallery sells lot of 

DVD videos last few years. The Digital video Disc (DVD) player was one of the most 

successful consumer electronic products of all time. The DVD market was also one of the 

fastest growing markets, experiencing rapid growth since its introduction The Company 

supplies the following products for rental or sale: 

• DVD videos 

• Accessories for video and games 

• Video game software 

• VHS videos 

• Concessions 

OUR COMPANY PROFILE 

Virtual Smart Team (VST) is an experience small company that prides itself in building 

Electronic Payment Systems for any e-commerce business. It started in 2003 with four 

brilliant students of Internet science and technology and grew to a unified reputable 

company in Asia that develops solution for any e-commerce related problem. VST was a 

leader in using the Internet and e-commerce technologies to squeeze greater efficiency and 

to streamline the online payment system and encourage greater customers to use different e- 

payment system to shop online. VST expertise had proved instrumental in helping many 

companies become the industry’s low provider and drive cost out of its business. Each 

member of the organization is dedicated and productive. However, we work collaboratively 

to tackle any business task. Each member delegated to a task is always calculative in quick 

delivery of results; this is spelt out in our company’s motto: “strive for customer 

satisfaction” 

The key staff members of Virtual Smart Team organization are: 

• Anthony Claret: Project Manager and Business Analyst 

• Esther Amadi: Technical Analyst 

• Jacky Lo Vui Mien: Market Analyst 

• Jessica Jarrell: Financial Analyst 



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. 

MOTIVATION 

Nowadays, the modernization and growth of information technology has affected almost all 

of aspects of the human beings, including business. In the old days, business transactions 

were done physically as the customers have to meet with suppliers. The information 

technology makes it possible to carry out business transactions virtually using Internet or 

electronic commerce (e-commerce). This is because people are able to make enquiry, place 

order and make payment through the Internet. In order to make the e-commerce of a 

company successful, an Electronic Payment System is needed for that company. 

The main driving motivation for the implementation of the Electronic Payment System for 

Movie Gallery is the enhancement for transaction effectiveness. Here is what we mean: 

Picture being in a Movie Gallery store in United States when all of a sudden 40% of people 

leave their half-empty shopping carts in the middle of aisles and leave the store all at once... 

Alternatively, imagine the frustration of a shopper who has taken the trouble to pick out a 

cart full of DVD’s that he wants to rent, or Video Game accessories that he wants to 

purchase. Only to be held back by a store clerk insisting that they complete a lengthy 

questionnaire and remember a password they were assigned when they last visited the store 

several months ago in order to rent the items. This is unfortunately, what is currently 

happening at Movie Gallery Stores today. 

The reason why this is happening is that Movie Gallery Inc does not have a standard 

solution to authenticate sales and the required standardized forms that modern computer 

systems need to "talk" to each other. 

Electronic Payment System can solve this problem; it can increase the speed of processing 

by providing a real time operation for examples like a faster response in replying enquiries 

and other customer services. Since Movie Gallery Inc deals specifically on rental and sales of 

DVD’s, if it considers conducting online rental service, E-wallet solution (e-payment system) 

should be the good e-payment system that will take much of the annoyance and tedium out 



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of shopping on-line. This can be done by providing an electronic file in which people can 

safely store their names, addresses, credit-card numbers, passwords and any other 

information they may need for registering on movie Gallery website. 

This e-payment system will be very convenient for the consumer, and for the merchant. It 

will stimulate more transactions, more business completed, and more sales. From our 

research, it is our experience that merchants are frequently frustrated by the fact that more 

than 40 per cent of consumers abandon their on-line purchases when they are confronted 

with requests for personal information. 

With E-Wallet in place, it will enable Movie Gallery customers to enter their credit details 

and then conduct repeated transaction using any of the following mentioned media(s). It 

may only require customers to simply to use PIN to do the transactions. 

o Web 

o Email 

o WAP 

o SMS 

Whether it is an online form, within projected Movie Gallery Online Shop, an Email or by 

replying to an SMS text message, it will allow customers to purchase or rent DVD’s by the 

simple addition of a PIN. This may results in increased sales since your customers do not 

need to add details each time they make a transaction. No more requests for Name, address 

and Billing address 

It is an incorporated system for ordering, making payment and doing financial account. In 

addition, the tiresome paperwork for recording and tracking of orders can be reduced due to 

the automation because all of them can be put together in interconnected database. 

By implementing the Electronic Payment System, it will also help the Movie Gallery to 

collect its earnings easily, and thus cutting down staff. The setup cost for the Electronic 

Payment System is relatively high but after it has been setup, the company can earn many 



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profits and can gain back the money that it has spent for setting up the Electronic Payment 

System. 

Besides that, a wider marketing area is also one of the most important motivations for the 

implementation of the Electronic Payment System. Since nowadays the movie market is 

becoming increasingly competitive, the competitors of Movie Gallery, examples like 

Blockbuster Inc., Netflix and cable companies like Comcast, Time Warner, etc., have 

recently entered the market and are beginning to take away some of Movie Gallery’s share. If 

Movie Gallery implements the Electronic Payment System, it will be able to compete with 

them and expand their market into worldwide. 

Once more, Movie Gallery most times faced problems of lost revenue not only because of 

unpaid invoices, but also because of time taken to rectify unpaid invoices and invoice details. 

Often, entire days were devoted to ringing up individual customers in an effort to collect 

outstanding payments. But we know that business this time requires an efficient, reliable and 

fast method of collecting credit card payments onsite that can be used by all employees, 

reducing the number of cash payments and unpaid invoices. With all this difficulties and 

losses, our smart team that, this e-payment system can automate this process and thereby 

reducing the unnecessary cost for this company. 

IDEA 

Current Market situation 

Movie Gallery Inc has no doubt gone along way to establish itself in video rental services 

with its growth primarily from acquisition and new store opening. However, most of it 

income is generated from renting of movies and selling of accessories through a traditionally 

brick and mortar method. Although, this business method is relatively adequate, however, 

the contemporary trend of conducting business online offers much more opportunity. It will 

not be too far a truth to argue that Movie Gallery Inc would have made much more revenue 

or would have attracted more customers if their business operation has been conducted 

online. Suffix to say that Movie Gallery business model is one directional and do not cover 

the entire potential market segment. It becomes evident to conclude that movie Gallery 



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customers that prefer to purchase or rent movies or accessories online are permanently lost 

in the scene, since Movie Gallery does not conduct online business. 

Although Movie Gallery launched moviegallery.com through a separate, wholly owned 

subsidiary to cater for customers who wants to be updated on information about their 

operations. This attempt is commended but inadequate for such a huge company to 

maintain its place in this online competitive market. 

Having reported previously on the process and difficulties customers undergo in filling out 

questionnaires and forms in order to rent a movie or time wasted at the aisle to pay cashier 

for a small item bought from any movie Gallery location, taking cognizant of company 

careless losses of customers. We have carefully selected an efficient e-payment system for 

movie Gallery that aim to solve most of the problems enumerated. 

In this way, Movie Gallery needs to work out a new plan for a new development of a 

business model. This implies that Movie gallery needs to adopt an online global trade 

transaction management system to increase the operational efficiency of its buying and 

selling operations. This system will process payment as well as ordering and other 

transactions. It will ensure that data transmission on the new system has to be reliable, with 

no lost data and no system downtime. This commercial site will also support credit 

electronic payment method. 

According to Shesney, Electronic payment methods 

expedite payments online and reduce payment-processing 

costs 5 (Shesney 2000) making sure that such system is safe 

and secure for people to use. Assuming the website is 

already in place, most times, customers need to fill one or 

two forms to purchase or rent their favorite movies online 

which is tiresome and consume much time. With e-wallet in 

place, e-Wallet allows your customers to key in their credit 

details and then conducts transactions repeatedly with the 

company simply using a PIN to operate on web, SMS or 

5 Shesney, G. “Process online payment quickly and effectively.” E-business advisor, june2000. 



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other application provided. As shown here. 

N.B The image above is captured from source: 6 

SWOT ANAYLIS 

This tool enables us to identify the strength of the E-payment. We are guided by this 

analysis. It was use as first stage of our planning and it helped our market analyst to focus on 

key issues. SWOT stands for strengths, weaknesses, opportunities, and threats. 

Strengths 

We chose to list down the strength of the new e-payment. Our idea is to give our client a 

healthy outlook on what they intend to benefits if this system is implemented. This benefits 

and strength are for the merchant and customers. Some of the long lists of strengths the e- 

wallet systems about to implement offers are: 

o No need to carry your credit card around with you - just remember your PIN 

o Simple click through purchasing process 

o Automatic top-up facilities for pre-pay credits 

o Enable secure Commerce transactions 

o Simple click through and SMS reply path purchasing process that promotes 

increased likelihood of repeat sales 

o Customers much more likely to purchase if they have already entered their payment 

details 

o Fully secure process 

6 _ (n.d) 2006,ewallethttp://www.mppglobal.com/ E-wallet/PP eWallet Macro and 

Micropayment Services.htm 



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o Familiar card face style display 

o Organize your information with nested categories 

o Card notes let you add extra information 

o Over 30 easy card templates and 40 icons included 

• High initial capital investment 

Weakness 

• Potential for overall slower system during transition/implementation period 

• Although there are many benefits to e-wallet, there are also many significant 

disadvantages. These include fraud, failure of technology, possible tracking of 

individuals and the loss of human interaction. 

• Fraud over e-payment technology has been a pressing issue in recent years. Hacking 

into bank accounts and the illegal retrieval of banking records has led to a 

widespread invasion of privacy, and has promoted identity theft. 

• There is also a pressing issue in regards to the technology involved in e-wallet. Power 

failures, loss of records, and undependable software often cause a major setback in 

promoting the technology. 

Opportunities 

Should this e-wallet solution works well with Movie Gallery, it will generate huge revenue 

and most organization that has not applied this will follow suit to implement this system 

• If implemented, The Company will increasingly cash up on its credentials as an 

online home entertainment retailer by selling its products worldwide. 

• Most money in today’s world is electronic, and tangible cash is beginning to become 

less and less frequent. With the introduction of internet / online payment with just a 

click,, paper money is becoming outdated. 



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• E-wallet payments allow for the immediate transfer of funds from an individual's 

personal account to a businesses account, without any actual paper transfer of 

money. This offers a great convenience to many people and businesses alike 

Threat 

• All successful Internet business attracts competition. Since Movie gallery sells the 

same or similar products as netflix, blockbuster and other online businesses, it may 

become more and more difficult to differentiate the brand from its competitors 

• Poor information awareness to the public on how to use the system 

Market Plan /strategy 

Base on the EPS that we want to implement, our target market will be a mainly online 

customer. Since E-wallet may be unacceptable in a bricks-and-mortar store, but it has long 

been considered inescapable aspects of Internet retailing. Presently Movie Gallery deals with 

customers that do go to their stores to buy or rent movies but with this e-payment, 

overwhelming majority of its purchase will be with credit card. A good number of teenagers 

can be identified also as the major target as teen enjoys movies very much. Other online 

shoppers will also form part of the targeted market. 

CHOICE OF TECHNOLOGY 

Due to speedy development, change in technology, and business re-engineering, there 

is a necessity to recognize suitable technologies and apply it to Movie Gallery, Inc. However, 

Movie Gallery’s advancement from the promotional stage to the online transaction stage will 



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also entail a sophisticated web site design that has the capacity to allow the sale and/or 

purchase of goods and services via its web site 7 

Therefore, the implementation of a cost effective, objective-oriented and secured e-payment 

site relies on the type of Electronic payment system (EPS) applied and the technologies that 

are incorporated into the Electronic payment system. 

Additionally, it is factual that the electronic market is growing strongly and becoming 

popularized as the day goes by, thus, in order to employ an EPS into an already existing 

business website, it is of uttermost importance to have an idea of the essentials that make up 

the electronic payment system. This knowledge will assist in understanding how the 

components of the EPS functions. The basic items of an EPS include an electronic 

catalogue, database, and shopping cart, credit transaction processing system and a 

connection or interface, business software. 

To this end, we will provide an analysis on the three e-payment systems that are related to 

the business environment of Movie Gallery Inc, describe how the systems work and make a 

detailed recommendation on the most suitable EPS for Movie Gallery Inc. Lastly, we will 

propose technologies that will be used to the incorporation of the EPS system. 

Electronic Payments Overview: A win-win proposition 

It has been over a century, since paper checks began serving as the deep-seated settlement 

method for financial transactions. Today, advancement in electronic technologies, have 

created new possibilities within the payment supply chain. Thus far, electronic payment is 

growing rapidly however, an efficient Electronic Payment System is one that is absolutely 

convenient for web purchasing, user-friendly, manages a variety of payment methods, 

competent to withstand unsolicited electronic intrusion, and cost-effective for low-value 

transactions. There are a variety of electronic payment systems. However, we will only 

7 -(n.d) Nygllhuw Morris, E-Commerce: Getting your business online 

http://www.kiwiwebs.info 



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analyze three e-payment systems and recommend one system that will be suitable for the 

business environment of Movie Gallery Inc. 

1 Types of E-payment Solutions 

E-wallet 

Paypal (person to person payment methods) 

Digital Card 

Definitions and assessment of e-payment solutions 

“Digital cash is a digitally signed payment message that serves as a medium of exchange 8 ”. 

Digital cash is a system of purchasing cash credits in relatively small amounts, storing the 

credits in your computer, and then spending them when making electronic purchases over 

the Internet. in theory, digital cash could be spent in very small increments. Most merchants 

have begun accepting digital cash because it is deemed an alternative to other forms of 

payment for fairly higher price purchases. 

How Digital cash works 

By running the Digicash software for the first time, RSA public/private keys are generated 

and a "cyber wallet" is automatically installed into the computer. This RSA key allows 

transactions between the customer and the bank to be secure. Afterwards, Money can be put 

in the wallet by deciding how much is needed and then sending a signed message to the bank 

asking for the amount to be deducted from the user's account. The bank reads the message 

with private key decryption and verifies if it has been digitally signed in order to identify the 

8 J. Orlin Grabbe, (1998) Concepts in Digital Cash, http://www.aci.net/kalliste/digiprin.htm date accessed: 

10 February, 2006 



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user. The bank then generates "electronic coins", which are messages bearing serial numbers 

digitally signed by the bank. Now, the user is entitled to use the coins for spending at 

merchant sites. Merchants receive the e-cash during a transaction and see that a bank has 

authorized it. They then contact the bank to make sure the coins have not been spent 

somewhere else, and the amount is then credited to the merchant's account 9 . 

Source: http://www.cs.bham.ac.uk 

Benefits and limitations of digital cash 

A basic limitation of digital cash is that counterfeiting would seem much easier with such 

electronic bank notes than with paper money since they are merely electronic signals. 

However, the development of public key cryptography could provide a means of eliminating 

this problem. An advantage is that user does not need to enter all personal information every 

time purchase is made online. In addition, some individuals consider digital cash’s process of 

payment to be complicated and simply prefer submitting their credit card information. 

Person to person Payment method (P2P) 

These e-payment schemes (such as Paypal) enable the transfer of funds between two 

individual. This process requires signing up with Paypal o the internet to transfer money to 

some body. This process is safe and secure for transfer of small amount of money and most 

of the vendor have different policies or operate differently 

9 http://www.cs.bham.ac.uk/~mdr/teaching/modules/security/lectures/DigitalCash.html 



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RECOMMENDED EPS SYSTEM 

Because of strategic analysis on a variety of Electronic Payment system, we have 

recommended e-wallet payment system for Movie Gallery Inc. The basic reasons as to why 

we choose to recommend e-wallet is because it is deemed to satisfy the very important 

criteria of an convenience shopping and efficient policy, data flow and good mechanism of 

purchasing with just a click. Actually, this EPS has all the necessary components to satisfy a 

variety of customers, conduct secure transaction and ensures convenience. 

Electronic wallet (e-wallet) is a software component that user downloads to their desktop 

or any acceptable application in which the user stores credit card numbers and other 

personal information; when shopping online, the user simply clicks the e-wallet to 

automatically fill in information needed to make a purchase. 10 (Efraim Turban 2004) 

10 Efraim, K.J., et al “Electronic commerce: A managerial Perspective”. Electronic 

Payment 13, no. 499 (2004) 



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Use to Store: 

Calling Cards 

Credit Cards 

Health Info 

Passwords 

Travel Clubs 

PIN numbers 

User Names 

Accounts 

Memberships 

How E-wallet works 

E-wallet solutions are personal data-encrypted files that promise to help remove shopping 

roadblocks 11 (GCIS 2005). E-wallet solution is designed to take much of the annoyance and 

monotony out of shopping on-line by providing an electronic file in which people can safely 

store their names, addresses, credit-card numbers, passwords and any other information they 

may need for registration forms on movie Gallery website. 

Most E-wallet uses a newly released standard called the Electronic Commerce Modeling 

Language. This ECML works with any Web-security software and enables e-wallets to 

automatically feed customer information into the payment forms of participating 

merchants. 12 (GCIS 2005) recently, Redmond, Washington-based Microsoft Corp. issued a 

wallet called Passport that consumers can use at a growing number of Internet shopping 

11 - (n.d) “Discover the GCIS internet leverage.” http://www.gcis.ca/Ewallet/e-wallet (tm) 

solution from the Center.htm accessed February 2006 

12 - (n.d) “Discover the GCIS internet leverage.” http://www.gcis.ca/Ewallet/e-wallet (tm) solution from the 

Center.htm accessed February 2006 



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sites, all of which are required to conform to commonly accepted privacy standards. 

However, one major drawback of the Passport solution is that it only works with a handful 

of e-commerce sites. 13 (GCIS 2005) 

The e-payment method proposed in this report take different approaches to safely storing 

customers' information on any Web site. Base on the company that has utilized this 

technology on their site; they have suggested two types of E-wallets: 

1. GCIS e-wallet S-1 (thin wallet) 

2. GCIS e-wallet S-2 (fat wallet) 

These two terms refer to the size and nature of the files. The e-wallet S-2 solution actually 

sits on your customer’s own computer (s) and contains all the software needed to send 

credit-card numbers and other information securely to various shopping sites. E-wallet S-1 

thin solution is stored on servers controlled by the Movie gallery bank or other service 

providers, whose software manages the exchange of information with the Movie Gallery' 

sites. This e-wallet solution is actually stored on customers' own browsers for logistical 

reasons and it is stored with the customer’s financial institution. Both methods are perfectly 

and equally secure. The problem with storing the files on the bank's server is that it may 

eventually take up too much space if millions of customers decide to use any e-wallet. 

According to GCIS, S-1 thin wallet solution makes more sense for consumers because they 

can get at their file from any computer. For proper online transaction, E-wallet S-2 solution 

requires that Movie Gallery website should be install BridgeBook S-8 software. BridgeBook 

S-8 software from GCIS is necessary so their on-line forms can gather information from 

consumers' wallets. If consumers want to do business with retailers who do not have this 

software, they will not be able to fill out the forms automatically but still will be able to use 

our e-wallets to copy and paste information into the forms. 14 (GCIS 2005) 

13 

- (n.d) “Discover the GCIS internet leverage.” http://www.gcis.ca/Ewallet/e-wallet (tm) solution from the 


14 

- (n.d) “Discover the GCIS internet leverage.” http://www.gcis.ca/Ewallet/e-wallet (tm) solution from the 




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The Software “BridgeBook S-8” solution is also fully capable of "learning" new ways of 

entering data on forms. For example, if a movie Gallery uses an unusual category of field in a 

form, the first consumer to use the merchant's site may have to tell the program what 

information to enter, but our software then intelligently remembers this change and will not 

have to be told again. This means that consumers can finally shop anywhere and, in a very 

secure way. BridgeBook S-8 solution also provides customers with a way of keeping 

records of all their on-line transactions, a feature that most customers appreciate. 

Steps on How E-wallet is use 

1. Download the eWallet software from the provider that you have chosen 

2. Install the eWallet. Instructions for installation may vary from vendor to vendor. 

Most vendors have systematic instructions for installation and configuration. 



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N: B Diagram on this page are captured during our testing periods 

3. Enter your personal information: your name, billing address, shipping address and so 

on. This is the basic information that will be used for online shopping. Make sure to 

complete all of the required fields for the eWallet that you choose. 

4. Enter your payment information. This will usually consist of the credit card 

information of the credit cards that you intend to use for online shopping. Even 

after you have added a credit card to the eWallet, you can modify the information or 

delete it. 



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5. Use the eWallet. If it is set up properly, you should be able to use the eWallet on 

Web sites that are eWallet-enabled. The Movie Gallery may have enabled their bak 

end system. When you are presented with the form for your information on such 

Web sites, you can simply use your mouse to "drag and drop" the information from 

one of your credit cards in the eWallet to the form on the screen. The information in 

your eWallet will be automatically transferred to the order form. 

6. The "drag and drop" action consists of clicking on a credit card in your eWallet, 

holding the mouse button down, moving your mouse cursor to the appropriate area 

on the form and releasing the mouse button. 15 

7. For Web sites that are not eWallet-enabled, you can still use the eWallet to drag and 

drop the information in piece by piece. For example, you can drag your credit card 

15 (n.d) How to use E-wallet Http:// Www.ehow.com/how_18692_ewallet.html - date accessed 



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number on your eWallet and drop it directly into the HTML input field, which 

accepts this information. 

8. Some eWallets may not support the "drag and drop" feature, but the same function 

can usually be accomplished by clicking a button on the eWallet. 

Benefits and limitations of E-wallet method 

An advantage of e-wallet is that your customer account is created for your movie Gallery 

store with every online purchase. The payment details are collected during a transaction and 

create an account for your customer. Your customers can now transact at any time in the 

future without needing to provide their personal and payment details each time. They are 

just a password or PIN away from any purchase, on any medium a basic limitation of an e- 

wallet is if the user or customer share one computer with others people, their credit card 

might be tampered upon and fraud ca set in 

Strengths of e-wallet 

Strengths and Weaknesses of e-wallet payment system 

A major strength of e-wallet is that there are no 

geographical boundaries when using the e-wallet. 

The critical mass is high because most people use it 

as a means of payment online by click and a pin 

It ensures convenience because the user does not 

have to travel around with large amount of Cash. 

Because simply download the software on any of 

your applications for convenience 



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Weaknesses of e-wallet 

E-wallet provides its users with assurance of 

satisfaction on purchases because the customer is 

able to stop payment on a e-wallet account for 

unsatisfactory services. A number of companies 

guarantee all purchases over the internet 

Hackers are likely to invade users system to 

retrieve their personal information for dubious 

purpose 

Developing countries still do not fully support 

payments with e-wallet. Therefore movie gallery’s 

customers in developing countries may not accept 

readily accept e-wallet 

Implementation of efficient e-wallet vendor for Movie Gallery Inc, 

In order to effectively implement, an online e-wallet transaction, we will incorporate the 

services of e-wallet vendor. The e-wallet vendor will enable acceptance of online orders and 

offer credit card payment-processing services. BridgeBook S-8 software from GCIS is 

necessary so their on-line forms can capture information from consumers' wallets. If 

consumers want to do business with retailers who do not have this software, they will not be 

able to fill out the forms automatically but still will be able to use our e-wallets to copy and 

paste information into the forms 



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For the implementation of online e-wallet, we will include a digital ID for protection. A 

digital identity refers to “a set of digital information that is associated with a particular 

individual” most time, it has user name and password and access control lists. It is mainly for 

security and to confirm the identity of people in an online application This digital Id can be 

included in e-payment system. They are safe and secure including the computer that stores a 

digital ID. This Digital Id will work well with e-wallet to ensure security. 

SSL which is an abbreviation for Secure Sockets Layer, is a protocol developed by Netscape 

for transmitting private documents via the Internet. SSL functions by using a private key to 

encrypt information that is transferred over the SSL connection. Many Web sites use the 

SSL protocol to obtain credit card numbers and other confidential user information. 

Uniform Resource Locators that require an SSL connection starts with https: instead of the 

normal http 16 . Netscape Navigator and Internet Explorer support SSL 17 , which is the 

industry-standard method for protecting web communication. 

The SSL security protocol provides data encryption, server authentication, message integrity, 

and optional client authentication for a TCP/IP connection. Because SSL is built into all 

major browsers and web servers, simply installing a digital certificate turns on the SSL 

capabilities of the browsers. 

Server certificates or SSL certificates are designed to keep communications private, prevent 

tampering (i.e., preserves the integrity of every transaction) and assures confidentiality. 

At this point, it is important to state that VeriSign is a competent credit card vendor that can 

cater for the security concerns of Movie Gallery Inc 

Tools needed to incorporate an EPS in moviegallery.com 

Electronic catalogue, Shopping cart BridgeBook S-8 software 

Updated database Credit transaction processing GCIS e-wallet S-1 

16 -(n.d) http://www.webopedia.com/TERM/S/SSL.html date accessed: 1st March, 2006. 

17 -(n.d) http://www.vidoni.com.au/html/glossary.html date accessed: 27th February, 2006 



Page 25 of 42

system (VeriSign) 

INVESTMENT 

This section will summarize the establishment cost of running an e-commerce system for 

Movie gallery, it will also summaries the cost of maintenance for the system. Coupled with 

this, it will also lay emphasis on the cost of developing an electronic payment system for the 

movie gallery company. All estimates and amount involved will be displayed in U.S dollar. 

Considerations and assumptions will also be made concerning items and prices, but mostly 

figures are based on some researches. 

INITIAL E-COMMERCE DEVELOPMENT COST $ USD 

Computers 55000 

BridgeBook S-8 1000 

GCIS e-wallet S-2 500 

GCIS e-wallet S-2 500 

External disk drives 1000 

Software development 25000 

Software licenses 20000 



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Web security software 1000 

ECML 1000 

Web site development 5000 

Domain name registration 380 

Web site hosting 340 

Provision of internet service 800 

Database system integration - 

[Mysql power edge 2800] 

Servers 

Integration of secure socket layer 600 



Page 27 of 42 

1799 

12000 

Staff training 1 4000 

Telephone lines [ADSL set up] 8000 

Postage meters 340 

Advertising 

20000 

Printing invoices 29000 

Digital equipment 4000 

Consultants 

EPS setup 1000 

Total Initial cost 188,859 

ONGOING COST (OVER 2 YEARS) $ usd 

Website hosting 1200 

Web site updating 1400 

Provision of internet service 5200 

Telephone line (call cost) 29000 

EPS charges (based on percentage of sell) 12000 

Rebranding of hardware 15000 

Staff training 10000 

600

Bank charges 70000 

Advertising 12000 

Postage meters 2000 

Adopting a standard 

Total ongoing cost 157800 

Analysis of Figures 

The total estimated cost of cost of operation and maintenance for the Ecommerce for over 

two years is $346, 659. Out of this, $188, 859 is the initial development cost and the rest; 

$157,800 will be spent over the two years for maintenance of the system. 

Fortunately for movie gallery, one of the EPS chosen (Papal) is very good and profitable; 

there is no initial charge fee for papal implementation, the focus will be on the cost of 

hardware and implementation which has already being gotten in the first year. Charges are 

based on the percentage of sales made, meaning that movie gallery will really make a lot of 

profit by the implementation of this payment system in the sense they make use of it without 

paying initially. From the business background and motivation, it is observed that movie 

gallery is a very big and successful company, even the percentage charges by papal will not 

make any negative difference, rather more profit will be made in implementing this payment 

system as customer trust has being won due to good information security system. The 

ongoing cost for the system maintenance seems quite manageable, reason been that not 

everything, (asset) that was used initially are been bought again, the entire have to focus on is 

to maintain what has already been bought and a few more items perhaps. 

The papal system is not only advantageous for movie gallery but to the customers alike, 

reason been that they do not have to worry about someone having access to their credit card 

information because, movie gallery implements the secure socket layer (ssl) in their server, 

when they fill in their payment information, no one else knows it except Paypal, so this is 

really secured and confidential 



Page 28 of 42

As seen the demonstrated cost of maintenance, it is obvious that Movie gallery does not 

have anything to loose, if papal charge is high; it means that the percentage of sale is high as 

well because charges are based on the percentage of sale. 

Advertising cost here is the most expensive, but the ongoing cost will keep on reducing as 

the years go by because movie gallery does not have to purchase so many equipments 

anymore. The reason of the high cost of advertisement is to create an awareness of new 

stock to the customers, if the customers are happy and keeps shopping here, and then the 

ongoing cost will be covered. 

Considerations/assumptions of Investment 

The estimation for implementation of EPS for movie gallery has been done. Thorough 

analysis will be carried out during the system implementation. Prices given came as careful 

considerations regarding factors such as: 

The specification of technologies suitable for movie gallery.com 

Pries based on how much of each equipment to be implemented. 

How each technology fits for the business in question, how they are needed to carry 

out eh business. (For example the database server ((PowerEdge 2800) is used 

because configured with internal disks and has the capability of handling over 1900 

per minute) 

Staff training and educating was also being put in consideration 

The process of developing the web pages, Registration of domain name, hosting and 

updating were also being put in consideration. 

Careful consideration on how customers might appreciate and trust papal as the 

payment system was also being made.(customer satisfaction) 

Last but not the least, the profit that Movie gallery will make out of implementing 

this system was also being considered during estimation. 

HURDLES 



Page 29 of 42

Significant challenges that will be encountered when implementing the EPS for Movie 

Gallery Inc. Some of these factors could influence the implementation of this system. The 

factors include the following: 

System reliability is an issue because of the heavy daily reliance on online purchasing and 

ordering. Customers accustomed to physically examining products maybe wary of online 

purchase. 

Transaction Security Issues The efficiencies achieved by introducing e-commerce have 

resulted in increased customer satisfaction, helping to shift attitudes to electronic purchasing. 

However, security issues about credit card payment over the Internet are barriers to the 

accomplishment of Electronic payment system. Although e-wallet offer better security path, 

threat are anticipated 

Privacy concerns are a problem that cannot be completely eradicated. This is because the 

customer must submit personal information to the software before a credit card purchase to 

be made. This issue has lead to worries of privacy intrusion on the part of the customer. 

Therefore, this problem is a barrier in the implementation of this system 

Customer Satisfaction 

RESULTS 



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Implementing EPS for Movie gallery will bring some tremendous changes to the company, 

in the sense that customers enjoy the convenience of being able to look up at the availability 

of items online, select what they want to buy, with one-click make payment and get the 

purchased items delivered to them in their door step, this way, they don’t have to make a trip 

to the store to do some shopping, they can shop from anywhere and at any time, which they 

really enjoy and will always want to shop this way. 

It is Estimate that sale within two years went up to 1.2 billion Dollars; this will even 

increase more as customers will enjoy the convenience of doing their shopping online. 

Another Factor that will bring customer loyalty and increase sale is that customers trust they 

system to be secured because secured socket layer is implemented in the system, customers 

no longer have to be afraid of doing transaction online because the system is keeps their 

financial information secured. 

Efficient Service 

The Business being moved online will make the service to be efficient, some amount of 

time will be saved in the areas of attending to different customers because customers will be 

able to practice self-service provided by the some of the system functionalities. 

World Wide Recognition 

Movie gallery has already been recognized all over the United states and Canada,. And the 

internet is accessible world wide, so movie gallery will no longer be based in the United 

States only, but will be set to enjoy the benefit of a wider reach and international market. 

Effective Cost 

It has already been seen in the Expenditure analysis that the cost of expenditure of 2008 is 

40% lower than that of the 2007.This is made possible because a lot of money will be saved 

in staff time, as less staff will be needed to do the job since it is online. A lot of money will 



Page 31 of 42

also be saved in the area of communication, as we know that the Internet makes the 

communication cost a lot cheaper. 

FUTURE 

The implementation of the Electronic Payment System solution will provide growth to 

Movie Gallery as it allows the company to continue to develop in the future and expand into 

new markets that previously may not have seemed possible under the old transaction system. 

There is a possibility for the Movie Gallery to double their income since the transaction 

volume increase rapidly and the cost of several areas can also be reduced. Movie Gallery 

could cooperate with other organizations to develop commission or royalty structures to 

allow for a distributed spread of profits based on agreed rates. This would also give 

consumers easier access to harder to find and older movies that may not be typically 

available in other places. Meanwhile the association with suppliers for maximizing the supply 

chain management might be reached as well by shortening the delivery time for products, 

cost saving for delivery and warehouses fees where the orders placed can be forwarded to 

the suppliers. . Also the implementation of the EPS system will create avenue for interactive 

shopping from wireless systems on moviegallery.com. 

E-BUSINESS ESTABLISHMENT COSTS $ 

Preliminary research 300 

Staff training and education 1,200 

Database Upgrade 2,000 

VeriSign Certificate 700 

Hardware - computer 2,500 

Hardware - laser printer 4,000 

SSL Certificate 500 

Total e-business establishment costs 11200 

E-business cost savings $ 



Page 32 of 42

Photocopying 1,500 

Administration (errors, banking, bill pay) 10,000 

Communications time 6,000 

Rental for Shop Outlet 20,000 

Telecommunications 1,200 

Total e-business cost savings 38,700 38,700 

Less: Ongoing e-commerce costs 

External advisors - e.g. legal advice on 

Disclaimers and copyright. -1,000 

Bank charges -1,740 

ISP charges -2,200 

Programming (e.g. adding new sections, new online 

form) -1,500 

Systems maintenance -2,300 

Telephony – ISDN -1,700 



Page 33 of 42 

38,700 

Total ongoing e-business costs -10,440 10,440 

Operating benefit from e-business 29,260 

Note: This is the assumed estimate of Movie Gallery’s costing and operating benefits from 

implementing Electronic Payment system. 

Revenue 

FINANCIAL SUMMARY

This section will highlight the summary of the revenue expectance from e-commerce for 

the next two years. 

Expected revenue for 2007(all in U.S Dollars) $ 

Sales 800,000 

Cost price of goods sold 550,000 

Gross Benefit from E-Commerce 250,000 

Cost Savings from E-Commerce Initiative $ 

Staff Time 22,000 

Printing of Movie catalogs 57,000 

Distribution of goods 72,000 

Cost saved from traveling 15,000 

Total cost saving from E-Commerce initiative $166,000 

Total Gross Benefit from E-Commerce initiative for the year 2007 

Gross benefit from sale plus (+) Gross benefit from E-Commerce cost savings 

So, Total Gross benefit= $250,000 + $166,000= $416,000. 

Total Gross benefit for the year 2007 for movie gallery will be Total Gross benefit from E- 

Commerce Initiative ($416,000) minus Initial E-Commerce development cost ($198,849) 

So, Total Gross benefit for the year 2007= $416,000 - $198,849 = $217,151. 

So, Revenue for 2007= $800,000 

Gross Profit for 2007= $217,151. 

Expected revenue for 2008(all in U.S Dollars) $ 

Sales 

1.2 



Page 34 of 42

Cost price of goods sold 620,000 

Gross Profit from E-Commerce 580,000 

Cost Savings from E-Commerce Initiative 

Staff Time 32,000 

Printing of Movie catalogs 65,000 

Invoices 

Distribution 

12,000 

84,000 

Cost saved from traveling 24,000 

Total cost saving from E-Commerce initiative 217,000 

Total Gross Benefit =217,000+580,000=797,000. 

Gross Profit =Total Gross profit –Expenditure 

Gross Benefit for 2008 

797,000-157,800=639,200 

So, Revenue for 2008=1.2, 0000 

Gross Benefit for 2008= 639,800 

Financial summary for Revenue analysis 



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As of the time, the revenue that Movie gallery generates is $675,000(2005/2006).People 

enjoy the convenient of being able to shop online where they can easily look up of the 

availability of items, Select, place an order and make payment Online, this convenience 

provided is expected to boost sales and movie gallery is expected to make a $800,000 as their 

revenue for 2007 and a gross profit of $217,151. 

For the year 2008, the Movie gallery revenue is expected to abruptly go up to 1.2 Million 

Dollars ($1.2, 0000) approximately 50% increase and gross profit is expected to go up to 

$639, 200, increasing by 217% between 2007 and 2008. 

The reason behind the estimated high profit for the year 2008 is that Expenditure is 

estimated to drop down from $198,849 to $157, 800, that is about 40% decrease I 

expenditure as a result of cost of saving from ECommerce initiative. 

Below are some graphical charts displaying the Analysis expected revenue for 2007 and 

2008, chart of Gross profit, sales and expenditure. 

1,200,000, 60% 

Graphical analysis of Sales for 2 years 

800,000, 40% 



Page 36 of 42 

2007 

2008

800,000 

780,000 

760,000 

740,000 

720,000 

700,000 

680,000 

660,000 

640,000 

620,000 

600,000 

675,000 

Revenue 

2005 2007 

800,000 

Revenue 

Expected Revenue Graph for 2007. (Revenue from $675,000-$800,000) 

1,200,000 

1,000,000 

800,000 

600,000 

400,000 

200,000 

0 

675,000 

Revenue 

2005 2007 

1,200,000 

Revenue 

Expected Revenue Graph for 2008 



Page 37 of 42

2,000,000 

1,800,000 

1,600,000 

1,400,000 

1,200,000 

1,000,000 

800,000 

600,000 

400,000 

200,000 

0 

Graphical Analysis of Gross Benefits, 

Sales and Expenditure 

1,200,000 

800,000 

2,000,000 

639,800 

356,649 

198,849 

217,151 

157,800 

Sales Expenditure Gross 

Benefits 

856,951 

Graphical Analysis of Gross Benefits, Sales and Expenditure 

Sales Expenditure Gross Benefits 

2007 800,000 198,849 217,151 

2008 1,200,000 157,800 639,800 

Total 2,000,000 356,649 856,951 



Page 38 of 42 

2007 

2008 

total

Graphical analysis of Expenditures 

157,800, 44% Initial Cost 

198,849, 56% 

APPENDIX 

1 



Page 39 of 42 

Ongoing Cost

1. _ (n.d) 2006,ewallethttp://www.mppglobal.com/ E-wallet/PP eWallet Macro and 


2. The sources of the images pasted are cited at the reference page. 



Page 40 of 42

REFERENCES 

3. Efraim, K.J., et al “Electronic commerce: A managerial Perspective”. electronic 


4. – (n.a), (2006), About Movie Gallery, 

http://www.moviegallery.com/company/about.aspx, date accessed: 1 March 2006 

5. _ (n.a), (2006), Movie Gallery [web page], 

http://www.answers.com/topic/movie-gallery, date accessed 1 March 2006 

6. Braxton M. A.J, et al., “Crafting and Executing Strategy: The quest for 

competitive advantage, concept & cases Movie Gallery 13 no. c-38 McGraw-Hill 

Irwin 14 th edition (2005) 

7. _ (n.d) 2006,ewallethttp://www.mppglobal.com/ E-wallet/PP eWallet Macro and 


8. -(n.d) Nygllhuw Morris, E-Commerce: Getting your business online 

http://www.kiwiwebs.info 

9. J. Orlin Grabbe, (1998) Concepts in Digital Cash, 

http://www.aci.net/kalliste/digiprin.htm date accessed: 10 February, 2006 

10. http://www.cs.bham.ac.uk/~mdr/teaching/modules/security/lectures/DigitalCash. 

html 

11. Efraim, K.J., et al “Electronic commerce: A managerial Perspective”. Electronic 


12. - (n.d) “Discover the GCIS internet leverage.” http://www.gcis.ca/Ewallet/e-wallet 

(tm) solutions from the Center.htm accessed February 2006 

13. (n.d) How to use E-wallet Http:// Www.ehow.com/how_18692_ewallet.html - date 

accessed 



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