1. The long-term impact of contracting on the nations business may well be more positive than negative. The first thing, in the long run, that will change will be the number of fraud cases. Independent publishers have carried out researches and come with varying results. Some believe that the continuous use of electronic contracting will result in at least 25% drop in frauds committed over the internet due to insecure authorization.
Other independent researchers propose the fact that there will be a sudden decrease in the volume of transactions (which is expected to soar to $50 billion by 2009) since many websites and customers will not have electronic contracting immediately. This will lead to a time lag during which there will be a drop in transaction volumes.
(Electronic Contracting and its effects on transaction volumes)
But this decrease will be shortlived and within six months of the implementation of electronic contracting (to a full scale), there will be a full recovery of the transactions volume. The most significant long term impact of electronic contracting will be a more secure, reliable and robust electronic transaction system. The uncertainties and the frequencies of the fradulent activities will decrease considerably so that customers will be more
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It will also lead to the provision of more types of transactions to be brought under the electronic contracting system, if successful. This will result in greater security for the ordinary user.
(Frauds and Electronic Contracts)
2. The pitfalls, as is the case with every security system, are numerous. However, the most serious potential pitfall for this particular scenario i.e the use of electronic contracting is the fact that hackers and frauds are very much capable of developing fake electronic verification and signatures. This means that when hackers and frauds are successful in creating fake digital signatures, then they can go on and perform hundreds of thousands of frauds before getting caught. Currently, frauds and hackers are detected within ten illegal transactions. This makes hacking and fraud transactions a very difficult task to carry out on a large scale. However, with the electronic contracting in place, if a hacker successfully fakes a digital signature, then the implications of fraudulent activity using such signatures can be very drastic. (Contracts Commercial Law)
Some other pitfalls a rebound to the normal transaction systems since the technical issues invlved in operating an electrnic transaction system might render the costs too high to be feasible for vontinues operation.
1. Contracts Commercial Law. (n.d.). Retrieved June 1, 2008, from Contracts Law: www.hg.org/commerc.html
2. Electronic Contracting and its effects on transaction volumes. (n.d.). Retrieved June 1, 2008, from Transaction Volumes and Frauds: www.usa.visa.com/download/merchants/changes_to_merchant_levels_bulletin.pdf
3. Frauds and Electronic Contracts. (n.d.). Retrieved June 1, 2008, from Contracts Law: www.ssrn.com/update/lsn/lsn_contract-law.html
4. Making Things Easier for the Insurance Business. (n.d.). Retrieved May 3, 2008, from Insurance Practices: http://www.insurance-factor/things-to-do/index.html?hl=9&en=tabw