Digital Money And Payments
About To Explode - Cashless
Society Here
By Stephanie Izarek
NEW YORK - It will take some time before digital currency takes over and we become a "cash-less" society, but the groundwork is already being laid and the technology has matured enough for widespread use.
A recent report released by the Aberdeen Group suggests that the use of digital cash payments for smaller transactions, called "microtransactions," over the Internet will challenge traditional payment methods such as credit cards.
The report analyzes emerging digital-cash payment options, such as "stored-value" smart cards that allow users to make a secure online purchase in a way similar to using an ATM/debit card.
It also profiles 21 vendors in the digital cash software and services arena, such as 1CLICK*CHARGE, ClickShare Service Corp. Compaq, eCash Technologies, MasterCard, Visa, Media DNA, Microsoft and Qpass.
An eventual move to digital payments is good news for e-commerce merchants, especially those that rely on lots of smaller purchases like digital music.
Research director and author of the report, Judith Rosall, found that the cost of processing small financial transactions for businesses has blocked the proliferation of low-cost, pay-as-you-go methods. Digital currency technologies, by contrast, have matured enough to allow easy and inexpensive-to-process payments.
It's also great for consumers who get annoyed at having to enter personal information repeatedly in order to make a purchase. According to Jupiter Communications, 27 percent of online consumers abandon the items they put into a shopping cart because they find filling out the forms too difficult.
Microsoft's Passport, for example, takes care of that problem. Passport is essentially an electronic wallet that stores all the customer's personal billing and shipping information and a single sign-in name to use at sites that support Passport. (A credit card is used, but it's stored in with your Passport information.) It's easier for consumers because they don't have to keep of track different sign-in names and passwords just to make a simple purchase.
Obstacles to widespread use of solutions like Passport still exist. First, Web sites have to build in support to work with these solutions, but there is no standard in place for accepting smart card or electronic wallets. Second, consumers still harbor security fears when it comes to making online purchases, and particularly about storing all their personal information in one place.
But slowly, consumers and commerce are coming of digital age.
"We believe that digital cash technologies will begin growing in adoption and acceptance as early as 2000," said Rosall. "It will also contribute to significant worldwide e-commerce market growth, particularly in the sales of digital content, digital music, and on-line gaming."