Digital credit is available, but it may be a while before you pay at the screen

by Hank Mishkoff (

Note: This article originally appeared in The Met on July 20, 1995.

Bought anything on the Net lately?

Me neither.

In fact, I was beginning to think that nobody was actually buying anything on the Internet, that the Net was a great place to browse but a lousy place to shop. I mean, who in their right mind would enter a credit card number online, where it could be intercepted by the legions of evil hackers who lurk in the dark corners of cyberspace? Would I ever be able to shop, I wondered, just by pointing and clicking? Or would the promise of electronic shopping always be something that might be available "next month" or "next year" (like handwriting recognition, or Windows '95), but which would never be available right now?

Well, it turns out that you can shop on the Net, right now. "It's easy," says Benjamin Wright, a local attorney who specializes in the law of electronic commerce. "And it's cheap, too," he adds. "I just filled out a form on the Web, mailed First Virtual a check for ten dollars, and I was in business."

The "business" Wright is talking about is the sale of articles that he's written; he sells the articles on the Net for anywhere from $4 to $25. He also teaches seminars about the legal aspects of doing business in cyberspace; you can sign up and pay for one of his seminars without ever leaving the Net. (The seminars are a good deal pricier than his articles; you can expect to pay up to $400 for one of his 30-day seminars, which are delivered online, primarily through CompuServe.)

The "First Virtual" that Wright mentioned is First Virtual Holdings, a company that describes itself as the "merchant banker of the Internet." As Wright said, you'll have to pay First Virtual ten dollars if you want to use their services to sell your goods. And if you want to buy one of Wright's articles -- or any of the other goods offered by First Virtual merchants -- you'll have to pay First Virtual two dollars for the privilege. When you register as a buyer with First Virtual and fork over your two bucks, they take your credit card number over the phone; then, when you buy something from a First Virtual merchant, the purchase is charged to your credit card.

By taking your credit card number over the phone, First Virtual neatly sidesteps the troublesome lack of security that characterizes transactions conducted over the Net. Other companies are attacking the problem head on; probably the best-known of these is Netherlands-based DigiCash.

An old-timer in the online money business (since 1990), DigiCash offers an electronic cash system, popularly known as Ecash, that uses a sophisticated cryptographic feature called a "digital signature" to prevent fraud and to ensure privacy. In fact, DigiCash's commitment to privacy borders on the fanatical; a company brochure insists that Ecash is "unconditionally untraceable," and that it is "impossible for anyone to link payment to payer." And in a not-so-subtle appeal to the rising mistrust of big government, DigiCash helpfully points out that the use of Ecash "limits exposure to future data-privacy legislation."

One of the disadvantages of Ecash is that it you must have special software to take advantage of it. On the other hand, NetCash, a system offered by Software Agents, allows you to use your existing Email software to initiate transactions through a new electronic financial institution that they call NetBank ("the First National Bank of cyberspace").

And don't forget about CyberCash, a new entry into the field of electronic money, that claims Netcom and Quarterdeck among their supporters. Rob Sweeney, CyberCash's Midwest Account Manager, told me that his company will soon make a major announcement concerning relationships that they are in the process of establishing with several metroplex merchants and banks.

And what about the effort underway at Terisa Systems to reconcile and integrate SSL and Secure HTTP, the two primary systems of securing transactions conducted over the Web? (All you Internet trivia buffs will be pleased to learn that "Terisa" is an anagram of EIT and RSA, the two companies that founded Terisa Systems.) If that effort comes to fruition next year, as planned, Web servers and Web browsers might be able to handle the most stringent security requirements internally, making all of these forms of electronic money obsolete overnight.

So, with all of these options available for buying and selling goods and services on the Net, why are so few of us actually doing it?

Dr. Harry Tennant, a local Internet consultant who teaches an Electronic Commerce class at SMU, points out that, even though credit cards were introduced in the early 1950's, it wasn't until a few years ago that we were able to use them at grocery stores and pay-at-the-pump gas stations. "New ways of spending money permeate slowly," Dr. Tennant theorizes. "The technical challenges are trivial compared to the behavioral challenges, which involve issues of trust and confidence."

But despite Dr. Tennant's reservations, I have enormous confidence in the ingenuity of the business community. And there's not a doubt in my mind that soon, not only will I spending entirely too much time on the Internet, I'll be spending entirely too much money as well.

Cyberbiz August 3, 1995: Cybernating.

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