Munchies Inc. is a business that offers meal plans to college students. Students, or their families, buy debit cards with fixed amounts that they can use to purchase food at more than 50 local restaurants. Munchies sells the cards to students using an online storefront and in several locations near major college campuses. The following paragraph describes the online card sale process: Customers enter their credit card information online and then the amount of purchase. Munchies’ software automatically checks the card number to determine that it is a valid credit card number; for instance, there are certain digits that indicate Visa cards. The software displays an error message if the number is not valid. The usual cause of these errors is typographical. Once the customer completes the card order screen, the software sends the data in an encrypted form to Munchies’ host computer. Periodically, the company’s accountant retrieves transactions from the server. This is done by clicking on the ‘‘Get Transactions’’ screen button. For each online transaction, the accountant manually copies down the credit card number on a scrap of paper, walks across the office to the credit card machine, and keys in the credit card number, the amount, and the numerical portion of the address. The credit card software checks to see if the card is valid and charges it for the amount. The accountant next writes down the validation number, returns to the host computer, and enters it. The accountant prints a receipt for the transaction and puts it in a file. The customer database now reflects the new customer. When a customer purchases a card off-line with a credit card, the accountant swipes the card directly, checks its validity, charges the card, and then writes down the validation number and enters it in the host computer. Munchies is considering the purchase of credit card software that can reside on the host computer and interact with their accounting software. The credit card software costs about $400. The credit card company rates are likely to increase by about 0.5% because cards could no longer be swiped directly—all credit card purchases would need to go through the online software. The rate Munchies has to pay the credit card company is based on this mix. Credit card companies typically charge more if card numbers are punched rather than swiped because they have more chance of invalid transactions due to theft. It’s easier to steal a number than a card. Currently about half of Munchies’ sales transactions arise from online sales; the other half result from sales through the office. 1. Discuss whether Munchies should buy the credit card software. 2. Develop a flowchart for Munchies’ online sales process. 3. Describe the business risks associated with this process
Munchies Inc. is a business that offers meal plans to college students. Students, or their
families, buy debit cards with fixed amounts that they can use to purchase food at more
than 50 local restaurants. Munchies sells the cards to students using an online storefront
and in several locations near major college campuses. The following paragraph describes the
online card sale process:
Customers enter their credit card information online and then the amount of purchase.
Munchies’ software automatically checks the card number to determine that it is a valid
credit card number; for instance, there are certain digits that indicate Visa cards. The
software displays an error message if the number is not valid. The usual cause of these
errors is typographical. Once the customer completes the card order screen, the software
sends the data in an encrypted form to Munchies’ host computer. Periodically, the
company’s accountant retrieves transactions from the server. This is done by clicking on the
‘‘Get Transactions’’ screen button.
For each online transaction, the accountant manually copies down the credit card number
on a scrap of paper, walks across the office to the credit card machine, and keys in the credit
card number, the amount, and the numerical portion of the address. The credit card
software checks to see if the card is valid and charges it for the amount. The accountant next
writes down the validation number, returns to the host computer, and enters it. The
accountant prints a receipt for the transaction and puts it in a file. The customer database
now reflects the new customer. When a customer purchases a card off-line with a credit
card, the accountant swipes the card directly, checks its validity, charges the card, and then
writes down the validation number and enters it in the host computer.
Munchies is considering the purchase of credit card software that can reside on the host
computer and interact with their accounting software. The credit card software costs about
$400. The credit card company rates are likely to increase by about 0.5% because cards
could no longer be swiped directly—all credit card purchases would need to go through the
online software. The rate Munchies has to pay the credit card company is based on this mix.
Credit card companies typically charge more if card numbers are punched rather than
swiped because they have more chance of invalid transactions due to theft. It’s easier to
steal a number than a card. Currently about half of Munchies’ sales transactions arise from
online sales; the other half result from sales through the office.
1. Discuss whether Munchies should buy the credit card software.
2. Develop a flowchart for Munchies’ online sales process.
3. Describe the business risks associated with this process.
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