Holding your breath waiting for E-Cash?

The crux of Internet commerce is moving money from one point to another, digitally and securely.

A lot of people were betting on secure "digital cash" solutions to trigger massive commercial activity on the Internet.

A year or so ago it looked like we were in for a fierce fight among several competing digital-cash solutions, including First Virtual, CyberCash, and DigiCash, in Amsterdam. On the sidelines were specialty solutions such as Digital/Compaq's Millicent, aimed at enabling "microtransactions" of a few cents or a few dollars.

But the secure transactions trophy went to a dark horse -- Secure Sockets Layer, or SSL, the security technology that's built into every modern browser and many Web servers. Internet users are enthusiastically shopping online, and the digital-cash vendors are all but gone.

First Virtual is a shadow of its former self, CyberCash bought ICVerify (a vendor of credit-card processing software) and is now concentrating on Web-based credit card transactions instead of digital cash, and DigiCash hasn't been heard from in months.

And, although Compaq's Millicent won an award for technical innovation from CommerceNet last month, Millicent's future in the electronic marketplace seems dim indeed.

Keep it simple ...

As it turned out, almost every secure transaction solution required merchants and their customers to install additional software, follow complicated registration and purchase procedures, or both.

SSL, by contrast, requires nothing more than a relatively recent version of Netscape Navigator or Internet Explorer. And purchasing a product online using SSL is as simple as entering your credit card number on a Web page form.

Credit card order forms on SSL-secured pages have become so widespread that it's now hard to buy things online any other way. Even Secure Electronic Transaction, or SET, despite its heavyweight backers (MasterCard and Visa), has been slow to take off, because of the required wallet software. It is simply annoying to have to download and install yet another piece of software. What's more, the wallet and its money aren't portable as you move from one computer to another.

The SSL system works fairly well even for small transactions. I recently bought an article at the online archives of the San Jose Mercury News, where articles are sold for a dollar apiece. Sure enough, a $US1 charge showed up on my credit card bill the next month -- no big deal.

To make things even easier, an online vendor could consolidate small transactions like these into a single credit card charge at the end of each month -- and send the customer an e-mail invoice detailing the charges. My ISP does business this way.

SSL-based credit card orders have other advantages, too. Once a merchant has your credit card on file, subsequent orders can really be a breeze. For a stellar example, check out Amazon.com's one-click ordering system.

Of course, the situation is a little stickier when you're dealing with an unknown merchant. You can't be sure that they're going to use your credit card responsibly, or that they'll secure their database of credit card information sufficiently. But then, you don't have those assurances in the physical world, either.

SSL encryption is succeeding because it's simple, easy to use, and ubiquitous. Digital cash may have seemed like a great idea in its time, but it's been consigned to the scrap heap of cyberhistory.

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