December, 1997

Exploring Digital Cash

"Niche" Products and Systems

These products were perhaps innovative a few years ago, and represent stages in the evolution of electronic commerce infrastructure. They use much of the same language as other "digital cash" products, but are essentially seeking to fill niche markets between the old systems of credit (and now ATM) verification in person or by phone, and the newer methods of direct funds transfer over the Internet.

Clickshare: Newshare Corp. has created clickshare, which is not digital cash nor a micropayment system, but a system to total up bills for consumers for web page access. Participating web servers purchase a lisence from Clickshare ($1,995 and 20 percent of all revenue) and then host pages for which access is logged. Users sign up with one of the web servers (also called publishers) and are billed by this publisher for content accessed. If the user accesses content from other Clickshare publishers, the billable amounts are transferred between publishers. The product claims to be available from Clickshare's homepage (one can clearly send them some money, and find out later what's actually available) but the number of "publishing members" is not available. There is little security, as they're relying on low value of transactions and browser security features, as well as watching the user logs at each publisher to prevent patterns of access suggesting fraud or theft. They claim that the log information will not be used for any purpose other than billing. We've classified this as a niche product as, despite some wonderful new jargon (clickstream?), it seems that this product will be eclipsed by more comprehensive systems with less proprietary software and lower investments by content publishers. Clickshare does claim to be able to handle a purchase range down to 10 cents per transaction.

Virtual PIN: First Virtual created the Virtual PIN some time ago, and it is available now. First Virtual charges $10 annually for the service, which is designed to allow users to charge purchases over the Internet without sending their credit card numbers. The Virtual PIN is a proxy for the account number, and is sent unencrypted to merchants that accept these PINs. The PIN is then sent to First Virtual, who provides account information, and sends e-mail to the user requesting authentication of the purchase request. This is a niche product as avoiding transmission of credit card numbers is its only feature, and if people were to become confident in transmitting their account numbers (especially in light of increasing browser security levels, and the realization that verbal purchases over the phone network are no more protected) then the niche would cease to exist. First Virtual implies that they handle micropayments by discussing the sale of information, but a close reading of this shows that they're generally referring to shareware (with higher transaction costs than pennies) and for web content, their system would allow the user to receive the content, and later refuse to pay for it. This seems like it serves First Virtual's architecture, but will never be popular with content providers.

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