Nat Goldhaber, CEO of Cybergold certainly thinks so, despite the woes that pioneers Digicash and First Virtual Holdings encountered. Digicash is in Chapter 11 bankruptcy, trying to sell its technology, while First Virtual has exited the online cash business and changed its name.
"Microtransactions have not done well for lots of reasons, but early attempts were cumbersome," because they required downloading large files onto the users PC, said Goldhaber. "There was no good content for sale at a low price, so there was no rationale for building a good micropayment system. And there was no critical mass of people ready to buy, so authors were not interested in the market."
Compaq's unannounced deal with Japan's KDD Communications to deploy MilliCent throughout Japan is being helped by Japanese government funding. The system is due to go online April 1 with a non-monetary trial, with the full monetary expected in June. Compaq inherited the MilliCent technology when it bought Digital Equipment.
"This is our final test of the system to make sure it is ready for commercial use worldwide," a Compaq spokeswoman said via email today. Last fall the company completed a nine-month public beta, with more than $100,000 worth of microcurrency placed into circulation.
A final version of MilliCent version 1.0 system is due to ship April 1. Compaq has been seeking technology partners to take the product to market, rather than doing so itself.
"We are in discussions now with several Compaq partners to do just this," said Compaq, which hopes to become a major distributor of "microcommerce" solutions based on MilliCent.
Compaq's Japan deal doesn't surprise e-commerce analyst Scott Smith of Current Analysis.
"The Japanese market seems to be fertile ground for new payment technologies," Smith said, noting Japanese interest in e-cash stored on smart cards and in the Secure Electronic Transactions protocol for secure payments over the Net.
IBM is conducting a European technology trial of its form of digital cash, but Big Blue remains unconvinced that there will be a market for its electronic money.
Micropayments are generally less than $5 or $10 and most often discussed for buying content or a service online-a specific article, 15 minutes of playing a computer game, etc. Payments that small are generally not economic for a merchant to handle via credit card.
Cybergold's Goldhaber says his firm isn't starting from zero. His incentives firm pays cash for online users to look at ads and claims nearly 1.5 million registered users, more than a million of them active and most with cash in a Cybergold account. He thinks that boosts chances for success of his microtransactions scheme, which he aims to link to his "publishing for the rest of us" model.
His idea: Build an alternate publishing mechanism for people whose works were too small for conventional publishers to publish and enable visitors to spend cash they earned looking at ads to view the content of electronic newsletters, listen to local musical acts, and pay for a recipe for an obscure dish.
"The killer app is clearly MP3 music," Goldhaber enthused. Among the first merchants MP3 punk music site Epitonic, legal publisher Nolo Press, DVD and CD vendor CDWorld/Artistic Visions, logo shop BuyCollegeStuff, Aladdin Systems, and Xing Technologies.
Although adult content might be a good market for microtransactions, Goldhaber isn't pursuing it now. "We want kids to be able to come to our site."
Last week Qpass announced its Content Transaction Network for selling premium content via the Internet. It offers a one-day subscription to the Wall Street Journal's online edition for $1.95, for example.
Qpass uses a method called "accumulated balance"--recording charges for content, then combining them into a single credit card transaction at a particular time or when the balance reaches a specific level.
Another approach is "declining balance"--a fixed amount is put into an account and users then draw down the balance by making purchases. I Can Buy, a kids' shopping site, is testing that approach.
Ken Cassar, e-commerce analyst at Jupiter Communications, said his firm's enthusiasm for electronic cash has waned.
"Micropayments haven't taken off to the degree that we would have expected in the mainstream," Cassar said, noting that they're more popular among adult sex sites.
A general reluctance by Netizens to pay for content has hurt the prospects of micropayments, Smith and Cassar agree.
"There is still a prevailing attitude that content should be free," said Cassar, noting the difficulties subscription-based sites have encountered.
But Smith remains skeptical, saying that CyberCash had a large number of electronic wallets in consumers' PCs but its CyberCoin system has never taken off. .
"This is a step forward because it's better than previous attempts, but I don't know if it's anything so radical that it'll give Cybergold a runaway success," Smith said. "You need a critical mass of vendors and buyers to make it work, and that's probably going to be difficult."