This report focused on a narrow section of payment systems for Internet commerce: credit card payment systems. These systems are the most established methods for making purchases online, however, they are not the only ones. New payment methods for the Internet such as e-cash and micropayments are being developed. A picture of Internet commerce is not complete without a look at these emerging payment schemes.
I do not plan on providing an in-depth review of these emerging payment systems. I will however, provide you a starting point for finding this information yourself.
E-cash or electronic cash is digital money that you use to make online purchases. Consumers interested in shopping with e-cash have special software on their system that allows them to download money from their bank account into their cash wallet on their computer. When making a purchase, they exchange this downloaded money with the merchant for the product they want to buy. The merchant then redeems this money at a bank that accepts e-cash deposits.
There are many companies looking into providing e-cash payment systems. In fact CyberCash states on their home page that they are developing a digital cash system. However, only one company that I know of has an actual electronic cash product out on the market: DigiCash. DigiCash does not actually sell e-cash products to consumers. Their business model for e-cash is to license the technology to banks, which will host e-cash accounts for merchants and consumers.
Two banks currently offer e-cash accounts to consumers and merchants. The first bank to offer e-cash accounts was the Mark Twain bank of St. Louis Missouri. As of March 1996, EUNet of Finland has also started offering e-cash accounts (warning - their home page is mostly in Finnish).
One of the latest buzzwords on the Internet is micropayments. Currently, the way many WWW sites make money is from advertising. The content on their pages is free. The prevailing wisdom in the Internet community is that net-surfers are unwilling to pay for content. The concept behind micropayments is that if the fee for content was low enough, people would not mind paying for it. (By low, I mean 1, 10 or 15 cents a page.) Current payment systems are not set up for handling these types of transactions. The fees associated with processing credit card sales are higher than the actual payment under these circumstances.
Carnegie-Mellon University is currently testing a new payment they developed called NetBill. NetBill is an Internet payment system designed to deal with low-cost item transactions; i.e. micropayments.
CyberCash is also developing a micropayment system for Rocket Science Games. Rocket Science plans on developing a pay-as-you-play Internet arcade using CyberCash's micropayment system.
