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S. Peter Buck: Senior Consultant at Hyperion Systems Ltd, Guildford, Surrey, UK
Introduction
The discussion of online payments is not something that can wait for the Information SuperHighway (ISH) but must be addressed now. The explosive increase in the use of the Internet, and especially the World Wide Web, has seen the introduction of commercial services and pressures into what was previously a safe, friendly medium for academia. Not only has this resulted in the emergence of the kind of service previously restricted to the "Outernet" (commercial online services such as Compuserve, Prodigy, America Online, eWorld, CIX) and the like, but the potential size of the market has made this a much more frenetic and competitive activity. Everybody wants services. This has led to an equally frantic battle for payment mechanisms that can provide this new medium with the means of conducting transactions.
The Internet is nowhere near as all-pervasive or powerful as the idealized ISH longed for by Al Gore. However it is viewed by many as the natural precursor and testing ground for that ISH. The technology may change, and many trials and experiments are being conducted around the world to establish the technological basis of a practical ISH. However the underlying business models can be (and are being) developed on the Internet today. Any payment systems on a future ISH would be based on the same principles and techniques as those for the Internet, and any payment mechanism that becomes widespread and effective on the Internet can and will be appropriate on the ISH.
Many predictions see this burgeoning electronic marketplace becoming a significant component of the world economy[1]. However this can only happen once two key problems have been addressed[2], namely:
- Protecting property rights (i.e. a mechanism to ensure that the purchaser of digital goods such as images, software, music or videos cannot offer illicit copies for resale);
- Making payments (a secure mechanism that can cost-effectively support payment transactions in a distributed environment).
I will only address the second of these problems.
In this paper I will identify the different types of payment mechanisms that are proposed, on trial and in use on the Internet (along with some representative examples). I will then identify the key commercial requirements that...