Palate-Able Delights (PAD) is a niche retailer of high-end food products imported from various parts of the world: Iranian saffron and caviar, French champagnes, Italian truffles, and olive oils, vintage balsamic vinegar, fine cheeses, reserve wines from leading vintners, even limited-availability spring water. If a culinary delight exists, Palate-Able Delights has a mission to discover it, then share it with appreciative clients who quite happily pay a premium for the pleasure.

PAD has been very successful as an importer but has packaged such unique and intriguing combinations of items into 'theme services' that there is no significant demand for the PAD products to be exported to several regions of the world.

The product lineadapted for local preferences and delicacieshas potential in many parts of the world, and PAD believes it will eventually shift from a purveyor of fine foods to owning and managing a global gastronomic brand worthy of, as the CEO puts it, "the most discerning palates on the planet". PAD is planning its shift to a re-exporting mode, assessing target markets, and considering options related to the financials of the business. While the finance team at PAD has a general awareness of letters of credit and collections products and processes, these are generally not very well suited to food and highly perishable products as they are expensive, complex, and prone to error. The company CFO is intrigued by online settlement optionsher husband is constantly on eBay, bidding on various items, and paying for them through online settlement mechanismsand she perceives an opportunity to leverage these services for PAD.

Virtual Payments, Real Money? PAD recognizes that its business is niche and that it is not going to be competing for shelf space with Walmart or similarly positioned retailers. Presently, the company is comfortable with payment and settlement solutions that will handle small volumes and have a maximum on transaction values. The company CFO has directed a project team in finance to review some non-traditional settlement options, contrast them with more established options, and report its findings and recommendations. You have been appointed to lead the assessment team in determining whether such solutions are viable for PAD.

Major Considerations Security: Web-enabled business, including online financial transactions, has evolved significantly over the past decade, from blue-sky vision to practical tools and enablers. Despite a great deal of progress, security remains a concern for some international clients. While PAD is generally focused on retail sales, the company is looking at larger shipments to certain markets and may face exposures as high as USD 150,000 in a single deal.

Open Account: Banks across the globe are recognizing that importers and exporters are shifting significant business volumes to open account terms. Some financial institutions have interesting offerings in this space, and Palate-Able Delights could benefit from doing business on open account terms. Non-Bank Providers

PAD has learned, to its surprise, that UPS, whom they routinely use to ship parcels all over the world and with whom PAD has just concluded an exclusive logistics contract, offers trade finance solutions to small business customers, together with its supply chain solutions suite. The CFO has explicitly directed that this option be assessed.

Additionally, you have been instructed to review the viability of other models, including cloud-based offerings and more comprehensive trade finance/management solutions, several of which are demonstrating potential.

Other Considerations In addition to considering issues such as the security and mechanics of a payment solution, as well as its suitability to the PAD business model, you must assess the relative efficiency and cost of the options under consideration. Given the perishable nature of some of PAD's products, the speed of settlement is important. Similarly, cash flow issues and financing may be important to PAD and/or its buyersespecially where somewhat larger shipments are involved.

Case Study Questions

How well-suited is PayPal, or similar online payment solutions, to the PAD business and model?