posted on September 17, 2000 05:22:44 AM
I'm a systems analyst (in real life) and get all these assorted computer magazines. I was reading one about a new way of paying for auctions (or sending cash over the internet). It's in a column by Frank Hayes in ComputerWorld magazine. It's really more about 'micro-cash' (i.e. paying 1/2 cent to downloan an article, etc.) and would work for auctions just fine. What do you think?
September 11, 2000) Just over a year ago in this space, I wrote: "Think no one has doped out how to charge small amounts of money for information and other tiny Internet transactions? Go to the grocery store. See the prepaid phone cards at the cash register. Get a clue: Prepaid. Dirt-cheap user-side technology. Easy to buy. Duh."
I figured it would take three years for e-commerce gurus to realize that the answer to their microcash problem was right between the chewing gum and the TV Guide. I was off by about two years.
Next month, a European Internet service provider called World Online will start selling microcash cards in England at newsstands, gas stations and - of course - grocery stores.
The cards come in ý5, ý10 and ý20 denominations. The user buys the card, scratches off some goo that covers the personal identification number and then uses it online as a debit card. (ý1 is a little less than $1.50; you do the math.) World Online is pitching the card to online merchants, especially for selling music and online games.
EHPT, the joint venture of Hewlett-Packard and telecom giant Ericsson that built the back-end technology (www.jalda.com), claims its Jalda system can profitably handle transactions as small as a fraction of a cent.
News flash: E-currency is about to become roughly as convenient, flexible and anonymous as cash - and a lot less worrisome to customers who fret over privacy and security.
And that could mean the end for some of our most cherished ideas about business-to-consumer e-commerce.
The idea that customer data is the most valuable piece of a transaction, for one. When there is no customer data to speak of - no credit-card number, maybe not even a name - the most valuable element will be customer satisfaction, closely followed by the actual profit the sale generates.
Also out the window: the notion that everything delivered electronically on the Web has to be free. That one came out of the reality that credit cards have been the only widely used e-currency. Visa, MasterCard, Discover and American Express hate tiny transactions and sock businesses hard for letting customers charge small amounts. If something is inexpensive, it's been easier to give it away as a loss leader.
If prepaid cards can really let us charge a penny, a dime or a buck at a time, that picture could change dramatically. Everything from tracks of music and chapters of electronic books to customer service could get a (small) price tag attached to it.
Customers get to deep-six the fear that buying online is a high-stakes roulette game where the first step is always sending a credit-card number into the ether. Fraud, hackers, vendor glitches, kids who have discovered parents' online accounts and the specter of a huge credit-card bill worry plenty of potential customers.
But buy a $10 micromoney card, and at worst, the customer is out $10 - whether it gets spent, lost, stolen or hacked. That's a low-risk, low-worry proposition.
Of course, plenty of flotsam from the last wave of micromoney enthusiasm will wash ashore again, too - like the notion that we can stick a price on everything and that every Web site can be a profit center. And that B2C, not B2B, is where the real e-commerce action is.
Better get ready for all those ideas to shift. Because what rolls out in England this fall won't take long to cross the water. And when it does, you'd better have a microcash strategy ready when your CEO sees prepaid e-currency cards written up in an in-flight magazine.
Or spots them between the chewing gum and the TV Guide.
posted on September 17, 2000 05:30:29 AM
One has to wonder if the existing secure credit card servers will jump on the bandwagon, or even take them as a debit card. I know some do take debit cards and "ATM/check cards" now. It would be great if they translated into the systems and could be used the same way.
Someone needs to get on this; there is money to be made!
posted on September 17, 2000 07:44:09 AM
A couple of ideas occur to me.
I guess you could have a "permanent" pre-paid account. It could only be used for the amount currently available in the account but the balance could be replenished.
I do something like that now with a small checking account and a debit card. Max. at risk is the balance.
It would also facilitate all kinds of small personalized services. While much is presently offered as part of a monthly fee as with AOL, or to attract visits to a site with or without third party advertising covering some costs, this would allow for quick, cheap charges in exchange for automated voice, on screen or downloadable information.
Much like pay TV versus free TV except no monthly fee just x cents for each item the customers choose. Online vending machines for everything we wanted.
While there's great information available I would pay extra for help with targeted search functions that helped me narrow down to personalized choices. If the revenue enabled companies to upgrade service which saved me time and produced better results the 3,10 or 25 cents would be a bargain.
If it became universal I don't know why you couldn't carry a card instead of money and use to for RL purchases everywhere.
We'll know it's caught on when street musicians and panhandlers have swipe machines to accept contributions.
posted on September 17, 2000 08:02:52 AM
So you find the concept of prepaid phone cards and "gift cards" (available everywhere from the Post Office to Home Depot) a real loser?
posted on September 17, 2000 08:16:11 AMBecause what rolls out in England this fall won't take long to cross the water.
I'll worry about this when I start seeing gasoline sold in liters instead of gallons.
This will probably come to pass, but I would worry more about this. If I lose my cc, no problem, report it as lost and I'm not out anything. Lose this kind of card, and I will be out the value of the card. As far as the end of a customer database, that's what names and addresses and cookies are for.
posted on September 17, 2000 08:31:32 AM
I have 3 "stored value" cards in my pocket right now.
One is a phone card, of couse. Another is for the cafeteria where I used to work. The third is for the Metro.
Yes, if you lose these cards, you generally lose all of the money on them.
But if you lose a credit card, you are liable for the first $50, in most cases. I never keep anywhere close to $50 on any of these cards, so it is safer as far as that is concerned.
One thing that I like about using such "cards" (there's really no need for a physical card if we're talking about online transactions) is that they provide anonimity. Which is probably the exact reason that their adoption has not been more widespread.
posted on September 17, 2000 11:59:42 AM
Actually, PayPal could do (or could have done), something similar without much work, and wouldn't be having the sorts of problems it's having now.
Rather than charge payments through to credit cards, you could 'buy' a PayPal balance, say $100. then start spending it. Once it's spent, you could 'buy' another $100, etc. for big purchase you could buy, say, $500. then spend $340 and still have $160 to spend somewhere else.
Ie, what do you need the card for?
Personally, I wish PayPal would have developed in that direction. the free service requires manual (minimum!) 'balance purchase', while a more full-featured service (X.com bank account), would have the 'convenience' of charging straight to a Credit Card.
posted on September 17, 2000 12:29:27 PM
Well, when I first joined PP, I kinda interpreted the service to be exactly what is outlined here. The TOU stated you just "fund" your account by check or MO or cc, whatever. I did just that, I "funded" my account and made a few purchases. Eventually, of course, I didn't have exactly enough so I was told, "a charge will be made to your cc" did I want to proceed? I clicked yes. Then I discovered gosh, I don't really need to leave anything in that account. I'll just let them charge my cc when I make a payment! So much for leaving anything in MY account to fund the "float". To make it work, they would have to set minimum blocks like $20-$50-$100 or $500. Wanna bet on the amount MOST of us would choose to purcase at a time?????
posted on September 17, 2000 02:02:21 PM
I've proposed a somewhat simpler solution to eBay: free escrow. Any user who wished to go place bids would have to send money to eBay first, then they could go "spend" it by placing bids up to that amount. Once the Buyer received the item, eBay would release the money to the Seller.
I know, it'll be a chilly day down below before eBay took any fraud-prevention steps like that!
