Case Name :      First Virtual Holdings, Inc. (A)

Authors :           Sid L. Huff, Mike Wade

Source :             Ivey Publishing

Case ID :            98E007

Discipline :        Information Technology

Case Length :    20 pages

Solution Sample availability : YES

Plagiarism : NO (100% Original work)

First Virtual Holdings, Inc. (FVHI) is an Internet payments company based in San Diego, CA. The company developed a technology by which consumers can securely purchase goods and services over the Internet. Each participating consumer is provided with a “VirtualPIN” number, which is used in place of a credit card number to make purchases from participating online vendors. The vendors forward the consumer’s VirtualPIN number, along with the amount of the transaction to FVHI. FVHI then sends an e-mail to the consumer asking for confirmation of the transaction. When confirmation is received, FVHI processes the transaction and pays the vendor. The technology ensures that a consumer’s credit card number is never sent across the Internet. The system is secure but embodies a certain amount of inconvenience as each purchase required two steps. FVHI is a good example of a company with a good technology whose main challenge is to gain the critical mass of users necessary to make the system viable. The company faces strong competition from established industry players such as software developers, banks, and credit card companies. In addition, continued consumer reluctance to embrace online commerce has hampered the company’s progress.