E-cash shows signs of revival

Both IBM and Compaq are making moves in the digital cash market, despite the technology's notoriously sketchy history.

3 min read
E-cash just doesn't want to e-die. Despite several market failures, Compaq and IBM aren't giving up on digital cash schemes used to make Internet payments of $1 or less, called micro-transactions.

In Japan, a commercial version of Compaq's Millicent e-cash technology has gone live, allowing users to use NetCoin electronic currency to pay from 4 cents for a piece of multimedia clip art to 40 cents for an hour's play of a 3D game.

Separately, IBM has posted software code for its IBM Micro Payments on its AlphaWorks Web site for techies to tinker with. It's part of Big Blue's plans for putting out early versions of technology for others to assess, suggest changes, or express interest in licensing for commercial use.

"The money to be made in the vending machine model of Internet is astronomical," said John Wolpert, AlphaWorks' manager of emerging technology, calling those who have downloaded the Micro Payments client software "a who's who of major financial institutions."

Nonetheless, earlier efforts at digital cash have come up short in the market. Digicash, a pioneer in the digital cash business, last year filed for bankruptcy. First Virtual got out of online payments altogether, and CyberCash has found no great success with its CyberCoin offering.

IBM, which separately has run two digital cash trials in Europe, isn't blind to past problems

"There were notable failures, but in 1998 we had the Internet Christmas," Wolpert said. "It's a matter of timing, isn't it?"

Even so, the IBM technology today is for technical folks, not consumers. But consumers are the targets for KDD Communications (KCOM), the Internet subsidiary of Kokusai Denshin Denwa, Japan's largest global phone operator.

KCOM's NetCoin Center, running the MilliCent technology originally developed by Digital Equipment, went live June 1, according to Compaq. Japanese users can fund their Japanese wallets for as little as $8 in yen, then shop online for MP3 music (80 cents per song), recipes or a travel directory (10 cents each), or an a single English phrase (4 cents) for instructional use.

KCOM also will host MilliCent payment hosting services for content providers such as Asahi Shimbun, one of Japan's largest newspapers, which will make its archives available through MilliCent. Three-time world judo champion Yasuhiro Yamashita, gold medalist at the 1984 Olympics, will soon open a MilliCent donation site to raise money for Judo instruction around the world.

While Compaq's technology runs on Windows NT, IBM's technology is based on Java, making it easier to adapt to different computers and multiple currencies, IBM's Wolpert said.

"The success or failure will be determined on how it's implemented, not just on the idea of micro-payments," said Daniel Jue, an IBM emerging technology strategist. Being based on Java means it's easier to connect to existing billing systems, he said, including other micro-payments systems. Its security features have been designed so it can be used outside the U.S. without running awry of encryption export laws.

For users, its security features include protection against forgery or overspending. And it may not be only for PCs--one technologist checking out the IBM software hopes to use it so viewers can pay for video-on-demand movies.