Ask Glenbrook: Electronic Cash Payment Methods?
Here's a question we recently received:
Are the only electronic cash payment methods available today account based methods, e.g. PayPal?Or are there available any forms of true electronic cash which have to be issued by a third party, e.g. the technique developed by DigiCash's ECash?
We're not aware of any electronic cash payment schemes that could be called commercial successes. Instead, account-based systems such as PayPal and other stored value systems have dominated.
A couple of efforts were made to commercialize DigiCash's approach to electronic cash and they were market failures. Similarly, other 'thick client' payment schemes such as Millicent also failed to achieve any level of commercial success. A variety of electronic client-side wallet schemes also failed.
The "hard problem" for these schemes was the loading of "good funds", not the "exotic" technologies they used to secure and protect financial value and user details, prevent double spending, etc. Most of the attempts predated the opening up of the ACH system in the US (via NACHA rule changes) to allow web-initiated transactions as a way to remotely load funds into an account. Fortunately for PayPal, those rule changes dovetailed in terms of when they were adopted with PayPal's expansion in support of auction payments.
Note: Do you have anything more you'd like to add to this answer? If so, comments are open for this post.
e-gold.com is a very unqiue beast, that is often overlooked as a facilitator of true digital cash. while it may not be the commercial sucess that paypal is, it is an interesting study worth noting.
Posted by: shea | June 07, 2005 at 10:26 AM