CXO investigate

Cheat Sheet: Micropayments

A tiny step along the ecommerce boulevard...

Micropayments? Rings a bell but do remind me
Buying pricey items on the web is easy. For flights, cameras and cars you can shove it all on your credit card. But for smaller items worth a matter of pence that method is just not economically viable. So using either a pre-pay card, a special ISP or billing to your mobile phone you can pick up low-priced goods with ease. That's the theory, anyway.

Haven't we heard all this before?
Oh yes. Micropayments came storming to the fore a couple of years ago only to be flattened by the failed emergence of the paying-for content concept and standards from the W3C.

So what's the deal now?
Well, that dream lives on - kind of. Credit cards still work out to be hideously expensive when it comes to making numerous, small payments. With the transaction fees merchants are required to pay it's hardly worth their while. And faced with the reality that there is no other option than to start charging for content, micropayments could finally take off.

Yeah, but why should I pay for something that I've never had to before?
As a consumer, you might not be willing to fork out for content but your employer might. Just take a look at the success WSJ.com has created based on subscriptions. And when there are more exciting options available, such as exclusive viewings sports footage, you might change your mind.

So micropayments haven't taken off because there is no 'killer app'?
That and the fact that merchants just haven't been convinced by the technologies available.

So the whole venture's been a complete flop?
That's not completely true. Take ring tones, for instance. They only cost a couple of quid and people are already paying for them using premium rate phone lines.

So who's doing it then?
Rupert Murdoch no less. On 22 March News Corporation will file a patent for its system which uses mobile phone numbers to let visitors unlock certain pieces of content on Times Online and then add that cost to their monthly bill.

Who's in charge here?
That's another problem. No standards have been set. The W3C tried to push through the "Common Markup for micropayment per-fee links", but it just didn't happen. With no common rules, the wide scale adoption of a system or systems just hasn't happened.

Any moment now you're going to mention the 'M' word, aren't you?
You mean Microsoft?

Doh!
Well it would be impolite not to. With micropayments Ovum says one or maybe two platforms will quickly come to dominate. AOL and Microsoft are best positioned to do this. Microsoft's Passport wallet stores credit card data but can also handle other payment systems such as digital cash and electronic cheques.

Holy hacker! Is it secure?
Passport itself has had some security 'issues', shall we say. In November 2001 a flaw exposed customer data forcing Microsoft to remove the service temporarily.

Doesn't look that promising then?
For security vendors it could possibly be a nice little sweet spot. Although until someone comes up with a system that providers are willing to adopt en masse it's just a case of waiting patiently.

For a complete list of Cheat Sheets type 'CS1' into the silicon.com Search facility.

**Essential Links**
From the silicon.com archive:

The Times patents its micropayment system
http://www.silicon.com/a52193
The Times they are a chargin'
http://www.silicon.com/a52071
MOBILE CONTENT: A LICENCE TO PRINT MONEY?
http://www.silicon.com/a50505
Cheat Sheet: Microsoft Passport
http://www.silicon.com/a49043
Microsoft Passport flaw revealed - Wallet insecure
http://www.silicon.com/a48874
Microsoft admits 'Passport not secure enough'
http://www.silicon.com/a48913

External Links:
Get your own Microsoft ewallet
http://www.passport.com/Consumer/default.asp?lc=1033
http://www.thetimes.co.uk
http://www.wsj.com
http://www.w3.org/TR/WD-Micropayment-Markup/

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