Q & A
Please note: The questions and answers that appear below have been lightly edited.
Question: In terms of the increase in e-commerce purchases, how will this affect brick-and-mortar stores that offer online ordering and payment with in-store pickup compared to companies that provide home deliveries? For example, Sam's Club provides the capability to order and pay for items via their website, then you pick up the items purchased; then there's Amazon, where you order and pay, and the items are delivered to your home.
Answer: Retailers may be adjusting their "brick-and-mortar" store footprint and inventory strategies based on the impact of e-commerce on their business. Businesses are affected in different ways depending on the type of goods they sell and their customer base. The future of the order-online-and-pick-up model will be pressured as shipping costs to the consumer decline and speed of delivery is increased. If you can have something delivered to your house for little to no charge within an hour of ordering it, do you think you would visit a brick-and-mortar store to pick up an ordered item?
Question: It is great to hear about the advantages of the payment devices you described. However, the threat of hacking—and the need to protect the consumer—is necessary. Are there any works in progress to actually improve the reliance factors associated with the use of some of these devices?
Answer: Security and safety of the payments system is a key mission of the Federal Reserve System. Each payment device has various advantages and disadvantages with regards to protection against unauthorized access. As we mentioned in the discussion, a mobile phone has a number of supplemental elements that can be used to authenticate the device. In much the same way, the chip card incorporates a number of additional security features over the magnetic-stripe card. The industry is constantly working to enhance the security of payment devices and develop risk management tools to reduce the threat against fraudulent transactions.