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Micropayments

Micropayments. By Ricardo Szmit 14/11/1999. Overview. E-Commerce Today. The Concept of Micropayments. Micropayment Uses. W3C’s Markup for Micropayments. Electronic Wallet Systems. E-Commerce Today. Users buy concrete goods using credit cards. Examples: Books, CDs, toys.

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Micropayments

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  1. Micropayments By Ricardo Szmit 14/11/1999

  2. Overview • E-Commerce Today. • The Concept of Micropayments. • Micropayment Uses. • W3C’s Markup for Micropayments. • Electronic Wallet Systems. Micropayments - by Ricardo Szmit

  3. E-Commerce Today • Users buy concrete goods using credit cards. • Examples: Books, CDs, toys. • Credit cards are not profitable for small transactions (under U$ 10.00). • Credit card costs (in USA): • Merchant discount: 2% • Minimal fee: $0.25, $0.50 or more • Chargeback fee: $25.00 Micropayments - by Ricardo Szmit

  4. Digital Products • Examples: News, Music, Pictures. • Digital products are provided through: • Free Content. • Subscription. • Advertising. Micropayments - by Ricardo Szmit

  5. Free Content • Build market share. • Increase brand awareness. • Encourage users to pay for more complete products. • Problems: • No direct profit. • Used for lack of alternative. Micropayments - by Ricardo Szmit

  6. Subscription • Groups of products sold as unit. • Access allowed for period of time. • Problems: • High administration costs. • No impulse buying. • Shared passwords. • Consumers are hesitant to subscribe. Micropayments - by Ricardo Szmit

  7. Advertising • Banner ads. • Problems: • Annoyance for users. • Only viable for very popular sites. • Efficacy of ads is decreasing (1 in 200). • Small revenue per view. Micropayments - by Ricardo Szmit

  8. Requirements for New Model • Allow users to pay small amounts. • Simplicity (single click). • Security. • Privacy. • Solution: Micropayments. Micropayments - by Ricardo Szmit

  9. What are Micropayments? • Very small payments made over the Web. • Transactions too small for credit cards. • Can be as little as a fraction of a cent. • Alternative to subscription and advertising. • Can go in either direction. Micropayments - by Ricardo Szmit

  10. Scenario • The user clicks on a link requiring a payment. • The browser looks for an "electronic wallet", (a piece of software that acts a like a rechargeable phone card). • The wallet makes a payment for information downloaded. • The wallet keeps track of how much was left, and how much has been spent. Micropayments - by Ricardo Szmit

  11. Micropayment Uses • Publishing • Marketing • Software • Entertainment • Web Services Micropayments - by Ricardo Szmit

  12. Publishing • Magazines, newspapers, books. • Micropayment allows selling: • Minisubscriptions (days, weeks). • Specific sections of papers. • Magazine articles and book chapters. • Single pictures, cartoons and songs. Micropayments - by Ricardo Szmit

  13. Marketing • Vendors can pay to consumers: • Coupons and incentive programs. • Paying for filling surveys. • Frequent user points. • Example: CyberGold. http://www.cybergold.com Micropayments - by Ricardo Szmit

  14. Software • Developers can offer simple products: • Shareware and freeware. • Demo versions. • Upgrades and add-ons. • Java applets. • Source code for libraries. • Allow per-use payment. Micropayments - by Ricardo Szmit

  15. Entertainment • Micropayments motivate impulse purchase. • Virtual casinos. • Online gaming: • Pay for game or for time. • Winners can be refunded. • Adult sites: • Preserve anonymity. Micropayments - by Ricardo Szmit

  16. Web Services • Public-specific services: • Virtual communities. • Content-specific search engines. • Brokers and meta-services. Micropayments - by Ricardo Szmit

  17. The Cost of Information • How would you know what a given piece of information cost? • Links you have to pay for might be marked in a different color. • The browser could show the cost as you moved over the link. • Only when you click the payment is made, and the information becomes available. Micropayments - by Ricardo Szmit

  18. Standard Payment Information • We need a standard way to represent payment information for following hypertext links from Web pages. • The browser can interpret this information to: • Show the cost of each link to the user. • Ask the wallet to make a payment. Micropayments - by Ricardo Szmit

  19. W3C Goals • Develop a common mark-up language for payment information (standard way for micropayment information to be encoded). • Develop an API (Applications Programming Interface) to enable the browser to talk to the wallet. Micropayments - by Ricardo Szmit

  20. Payment per Link • The payment information could include: • The price. • The currency. • The payment scheme. • How to get a wallet for a particular payment scheme. • Information may be "public" or "private" to particular payment schemes. Micropayments - by Ricardo Szmit

  21. The API • Provides a standard set of procedures to allow the wallet and the browser to talk to each other. • Is browser and payment scheme-neutral. • Allows different wallets to be selected for performing some payment. • Allows users to download new wallets dynamically. Micropayments - by Ricardo Szmit

  22. W3C Working Groups • The Micropayment Markup Working Group: • Produced a specification for the embedding of micropayment information in Web pages. • The Micropayments API Working Group: • Is developing the API to transfer the micropayment information defined in the Web page to the wallet for processing. Micropayments - by Ricardo Szmit

  23. W3C Proposal • Common Markup for Micropayment Per-fee-links. • Specification of fields to define payment information (required and optional). • Alternatives for embedding fields in HTML (using OBJECT, EMBED or APPLET element). • Working draft: August 25, 1999. Micropayments - by Ricardo Szmit

  24. W3C Architecture • New module: Per Fee Link Handler (PFLH). • Implemented as Plug-in or Java Applet. • PFLH processes the payment information and communicates with electronic wallets. • PFLH functionality and communication with wallets will be defined in other working drafts. Micropayments - by Ricardo Szmit

  25. Required Fields • price: amount and currency. • textlink: textual description. • requesturl: product identification. • Payment systems: systems supported. • mpname: system name. • mpurl: system address. Micropayments - by Ricardo Szmit

  26. Optional Fields • imagelink: graphical description. • baseurl: absolute merchant URL. • merchantname: merchant designation. • duration: time for multiple retrievals. • expiration: end of offer. • Several others. Micropayments - by Ricardo Szmit

  27. Embedding Example <EMBED src="http://www.w3.org/PFLHPlugin.exe” baseurl="http://www.shop.com/biography" merchantname="ShopAndPay” requesturl="elvis.html" textlink="Buy the biography of Elvis" price="+0.01USD" 1.mpname="micropayment" 1.mpurl="http://www.micropay.com" 2.mpname="millipayment" 2.mpurl="http://www.millipay.com”> </EMBED> Micropayments - by Ricardo Szmit

  28. Electronic Wallets • The wallet might come pre-installed as part of the browser. • You may be invited to download a new wallet. • Wallet must be initialized, filling it with cash or credit. • Browser may have several wallets. Micropayments - by Ricardo Szmit

  29. Wallet Functionality • The wallet initiates the payment. • May involve a third party payment server. • Wallet are accessible outside the browser: • Check how much money is left. • Check where the money was spent. • Refill the wallet. Micropayments - by Ricardo Szmit

  30. Microsoft Passport Wallet • http://www.passport.com • Goal: The wallet store credit card numbers and shipping addresses. It can fill forms automatically, making it easier for customers. • Today 70% of forms are abandoned. • Microsoft wallet does not store money, and does not allow micropayments. • Uses ECML standard. Micropayments - by Ricardo Szmit

  31. ECML Standard • Electronic Commerce Modeling Language. • http://www.ecml.org • Partners: Microsoft, IBM, Compaq, Sun, VISA, MasterCard, American Express, others... • Defines standard names for form fields. • Fields include: Credit card information, billing and shipping addresses, etc. Micropayments - by Ricardo Szmit

  32. ECML Example <FORM action="http://ecom.example.com" method="POST"> Please enter card information: <p>Your name on the card <INPUT type="text" name="Ecom_Payment_Card_Name” SIZE=40> <br>The card number <INPUT type="text" name="Ecom_Payment_Card_Number" SIZE=19> <br>Expiration date (MM YYYY) <INPUT type="text" name="Ecom_Payment_Card_ExpDate_Month" SIZE=2> <INPUT type="text" name="Ecom_Payment_Card_ExpDate_Year" SIZE=4> <br> <INPUT type="submit" value="submit"> <INPUT type="reset"> </FORM> Micropayments - by Ricardo Szmit

  33. Electronic Wallet Systems • Based on online connections: • CyberCoin (CyberCash). • Semi-online: • Digicash (E-cash). • Millicent (Compaq-Digital). • Stored-value: • Mondex (MasterCard). Micropayments - by Ricardo Szmit

  34. Cybercash Micropayments - by Ricardo Szmit

  35. Digicash Micropayments - by Ricardo Szmit

  36. Millicent Micropayments - by Ricardo Szmit

  37. Mondex Micropayments - by Ricardo Szmit

  38. Current Status • All veteran micropayment schemes failed. • First Virtual: Closed! • CyberCoin replaced by InstaBuy (MS like). • DigiCash: Only 4 banks (Europe, Australia). • Millicent: Started to work only in Japan. • Problem: Chicken and Egg. Micropayments - by Ricardo Szmit

  39. Chicken and Egg Quoted from: “So far, every attempt to create a new currency for the Internet Economy has failed miserably. The digital-cash business has been plagued by a terrible chicken-and-egg problem: Consumers won't buy into new payment systems that aren't in common use, and without mass consumer participation, merchants will be indifferent at best.” Micropayments - by Ricardo Szmit

  40. New Schemes • OneClickCharge: Prepaid with credit card. • http://www.1clickcharge.com/ • Qpass: Aggregated with credit card. • http://www.qpass.com/ • Ipin: Charges to ISP bill. • http://www.ipin.com/ • eCharge: Charges to phone bill. • Http://www.echarge.com Micropayments - by Ricardo Szmit

  41. The Israeli Scheme • Trivnet’s Wisp: Charges to ISP bill. http://www.trivnet.com International Sales and R&D Offices PO Box 18 Shfayim 60990 Israel Phone +972 (0)9 951-8221 Fax +972 (0)9 951-8223 Micropayments - by Ricardo Szmit

  42. Future of Micropayments • Micropayments’ benefits are clear: • Increase revenue possibilities. • Motivate expansion of online content. • Allow user-specific digital products. • Current picture may be changed by: • Definition of standards (W3C). • Entrance of big players (MS). Micropayments - by Ricardo Szmit

  43. Reference Articles “Cha Aims Big With Micropayments Service”, ComputerWorld, July 1999 “Digital Cash Is Back”, The Industry Standard, September 1999 “Micropayment Firms Seek New Ways to Cash In”, The Industry Standard, May 1998 “Charging for Online Content”, D-Lib Magazine, January 1998 “Micropayments on the World Wide Web”, J. Martin Devine, December 1998 “The Millicent Microcommerce System”, Compaq White Papers, 1998 Micropayments - by Ricardo Szmit

  44. Reference Links • Micropayment schemes: • http://www.w3.org/ECommerce/Micropayments/ • http://www.cybercash.com/ • http://www.ecashtechnologies.com/ • http://www.millicent.digital.com/ • http://www.mondex.com/ • http://www.hrl.il.ibm.com/mpay/ • Micropayment pictures from: http://newmedia.com/NewMedia/97/08/fea/money.html • Presentation template from: Ahttp://www.presentersonline.com/ Micropayments - by Ricardo Szmit

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