Cisco Systems and Premenos Corp. recently announced a secure electronic
commerce experiment that should be readyin early 1995. The system uses
RSA Data Security Inc.'s public-key cryptography.
CyberCash Inc. is a well-funded start-up combining the talents of Dan
Lynch and William. Lynch converted the ARPAnet-the predecessor to the
Internet-to TCP/IP back in 1983 and has continually demonstrated his
abilities as an Internet visionary. Melton is the founder of Verifone,
a company that made real-time credit-card verification a reality for
retailers. Together they are working on a model for Internet commerce
that will accept digital cash, and that already deals with credit
cards, or debit cards. Expect to see CyberCash make its official debut
in the spring of 1995.
DigiCash was founded by Dr. David Chaum. The company pioneered E-Cash,
a software-only product that allows digital cash transfer over the
Internet. E-Cash was developed for smart cards and electronic
wallets-used in tollbridges, for example. DigiCash will supply the
technology through other organizations, including Encyclopedia
Britannica and NCSA (National Center for Supercomputing Applications),
which will release the products under various cooperation and trial
programs. The user software, which allows both paying and receiving
payment, will be distributed free of charge. DigiCash will encrypt
transactions and ensure anonymity.
First Virtual Holdings Inc. is attempting to become the first Internet
merchant banking system. The company brings together the Hollywood
business savvy of Lee Stein, First Virtual's president and CEO, and
three of the leading Internet gurus: Dr. Marshall T. Rose, Dr.
Nathaniel S. Borenstein, and Einar Stefferud.
Stein, an attorney and accountant, provides financial advisory services
to the music and entertainment industries. First Virtual principal
Rose, one of the Internet wunderkinds, has written the book (actually
several of them) on SNMP (Simple Network Management Protocol) and
network management. Borenstein, the chief scientist, is the primary
author of the MIME (Multipurpose Internet Mail Extensions) protocol
that allows transfer of anything digital over the Internet, including
multimedia documents. Stefferud, probably the world's foremost expert
on e-mail, has the role of chief visionary.
Introduced and online in October 1994, the First Virtual payment system
allows any Internet user to initiate retail transactions via e-mail.
The system aims to help maintain Internet culture by allowing buyers to
evaluate information prior to committing to a purchase, which is a
concept similar to shareware. No sensitive data is exchanged online in
First Virtual's system. Users set up accounts by telephone or fax, and
credit-card payments are processed off-line.
Registration fees are $2 for consumers and $10 for sellers. For each
transaction, sellers pay a 29-cent fee plus two percent of the
transaction price and a $1 processing fee each time a payment is made
to their account. Initial First Virtual merchants include Internet
Resources Group, Internet Multicasting Service, and an Internet
newsgroup filtering service founded by David Farber, an Internet
luminary. The Department of Commerce is also considering adopting the
system to offset distribution costs of electronic documents.
The Internet Shopping Network was founded by its president, Randy
Adams, who formerly was CEO and chairman of IIAT Inc., a publicly held
international education and training organization. The company, which
was recently acquired by the Home Shopping Network, is an online
microcomputer software and hardware superstore available to anyone with
direct access to the Internet. Internet Shopping Network distributes
more than 20,000 computer software and hardware products, plus
InfoWorld, a computer news weekly. Membership is free, and prospective
members need only pre-register with an approved Visa or MasterCard.
Microsoft is also getting into the act. It recently announced a venture
with Visa International that will enable Windows users to make secure
credit-card purchases over the Internet using software co-developed by
the two companies. The software will be based on RSA Data Security's
encryption technology and Visa's VisaNet system will be used to
authenticate payments. According to Chairman Bill Gates `Fall Comdex
'94 speech, a `Wallet PC' that handles financial transactions and other
consumer retail interactions may also be part of our future.
Netscape Communications Corp., which provides an enhanced commercial
World-Wide Web browser, announced that it will support credit-card
purchases via the Internet through credit-card processor First Data
Corp. The Netscape system uses RSA's encryption technology to scramble
sensitive data. Merchants can purchase Netsite server software for
$5,000, and buyers can access the system through free client software.
NetCash is another secure Internet project underway. Developed at the
Information Sciences Institute (ISI) of the University of Southern
California, it is a model for electronic currency that can be
anonymously transferred over an unsecure network without the use of
firewalls. NetCash allows service providers and users to select payment
mechanisms with varying degrees of anonymity.
Unlike most electronic cash systems in which only one financial
institution generates and accepts its own digital cash, NetCash is
designed to support the transfer of electronic cash between currency
servers. At this time, NetCash has not yet been made commercially
Open Market is another secure Internet transactions venture. The system
supports secure payment, real-time credit-card authorization, account
statements, administrative interfaces for storefront management, and a
customer feedback mechanism. The company offers `document
fingerprinting, ` which automatically and uniquely numbers documents so
that fraudulent distribution can be tracked.
Open Market's StoreBuilder kit ranges in price from $300 to $1,500 for
setup and $50 to $300 in monthly fees, in addition to transaction fees
and additional storage fees. Buyers can set up an account by sending
credit-card info over the Net or by phone and fax. Open Market uses
password and encryption schemes to secure its accounts.
Finally, Terisa Systems is a joint venture of EIT (Enterprise
Integration Technologies) and RSA Data Security that is dedicated to
producing a secure Mosaic product suite for Internet commercial
transactions (see Section 4.2).