Digital Equipment Corp. is taking the wraps off an Internet-based payment system that paves the way for electronic commerce in denominations as small as one-tenth of a cent.
The system, called Millicent, is aimed at giving on-line merchants a mechanism for charging for the "clicks" visitors make on a World Wide Web site.
Digital's director of emerging technologies, Russ Jones, demonstrated the system at FBMA America Inc.'s recent CyberPayments '97 conference in Washington.
Millicent (accent on the "cent") can help merchants sell and deliver so- called soft goods-products, such as newspaper articles-on the Internet.
"The industry is well on the way to solving the problem of secure credit card transactions on the Web," said Mr. Jones. "Our belief is that one of the key remaining areas is enabling low-cost commerce for soft content purchases that are delivered in real time."
Millicent is designed for transactions below $5.
The area of on-line micropayments is already crowded, even as some observers question its viability.
Among the products of Cybercash Inc., Reston, Va., is technology geared to the lower end of the payments spectrum. The company recently licensed a micropayments system called NetBill from Carnegie Mellon University.
Digicash Inc.'s E-cash and MasterCard International's Mondex smart card systems are also making plays for the micropayments market. Millicent can be operated economically because transactions cost system operators as little as a thousandth of a cent.
In addition to letting sellers assess per-click charges, Millicent allows them to compensate buyers when they click on advertisements.
"The Internet, while exciting, is languishing a bit because there aren't great revenue models," said Stan T. Hayami, business development manager at Maynard, Mass.-based Digital. "There is a real need to allow microcommerce on the Web."
A typical Millicent application would involve a consumer, a vendor (typically a publisher or a provider of Internet software), and a third- party broker (such as a bank). Millicent transactions do not involve real money, but rely on scrip-electronic coupons sold by individual brokers.
A transaction would start with the consumer purchasing scrip from the broker. If the consumer decided to purchase something-a newspaper article or a piece of software, for instance-the Millicent software would automatically convert the broker scrip into vendor scrip. The vendor could redeem its scrip for actual funds.
Because transactions don't need to be individually cleared, Millicent proponents boast that the system's speed is superior to competing models. "With a centralized system, I have to go back to the bank and obtain authentication, which can take as long as 15 seconds," said Mr. Hayami.
"With Millicent, the confirmation takes a second or two, because the broker's computer already immediately recognizes and authorizes vendor scrip."
Trials of the system are expected to start in late summer. Participants will include the Bank of Ireland, Reuters News Service, and Thomson Corp., parent company of American Banker.
"From our discussions with major content providers, the feedback is very clear that they are not asking for a single business model, but a number of different types of models that can be used simultaneously," said Mr. Jones.