Digital Equipment Corp. said it has launched a free public trial of Millicent, its Internet micropayment system.
Participants get electronic wallets and scrip that lets them buy goods and services from 20 on-line merchants. The program, running at least until summer, will help Maynard, Mass.-based Digital test the system's mechanics while measuring consumer interest.
Millicent, one of several proposed methods of making small payments on- line, can handle denominations as small as a tenth of a cent. Competing concepts include Cybercash Inc.'s Cybercoin and Digicash Inc.'s E-cash.
MasterCard International's Mondex smart card system has an Internet/micropayment option. Citicorp has patented EMS-Electronic Monetary System-and International Business Machines Corp. has a system in development called MiniPay.
All are waiting for a market to materialize. Their creators expected that by now, Internet surfers would want a coin-like system to pay for brief documents, software, games, or music downloaded from the World Wide Web.
Jupiter Communications, a New York research firm, has predicted that electronic cash will be used for 16% of a projected $7.3 billion of on-line transactions in 2000.
Millicent can process up to 200 transactions per second, said Jay Zager, vice president of business development in Digital's corporate strategy and technology group.
"Less than 3% of Web sites recover costs through advertising," Mr. Zager said. "Companies are forced not to participate on the Web or use it as a cost sink." If a seller could charge small amounts, the theory goes, profits would begin flowing.
A Millicent customer must download an electronic wallet onto a personal computer. Next would come a $10 electronic coupon. When the scrip is spent, the wallet can be refilled.
Digital is now funding the coupons, but in real life, customers would be loading money from checking or credit card accounts.
The self-financed proof of concept is similar to Digicash's "cyberbucks" trial of a few years ago.
Digital executives, who have had Millicent under development for a little over a year, said they are prepared to wait for a micropayments market to develop. The company is committed to expanding beyond its core business of computer hardware, but does not expect overnight success in entrepreneurial forays like this one.
Some observers say the technology needs more work. Erica Rugullies, an analyst with Giga Information Group in Cambridge, Mass., said Digital's wallet is difficult to download and undesirably changes the configuration of a user's browser.
"It will be a challenge for Digital to convince people to download the wallet and learn how to use it," Ms. Rugullies said. "Digital will have to get over some hurdles before this will be widely accepted."
Digital, which announced this week it is being acquired by Compaq Computer Corp., also must attract more merchants to generate consumer interest, the Giga analyst added.
Millicent's early appeal may be to merchants that want to institute loyalty programs, because the system involves scrip rather than fully negotiable currency. Though the scrip could theoretically be brokered for use with more than one product or service provider, it presumably would encourage customers to return to the issuing merchant.
Speaking two weeks ago at the RSA Data Security Conference in San Francisco, Amir Herzberg, a research manager at IBM's Haifa Research Lab in Israel, said micropayment capability will be crucial because it will not be practical under an elaborate security system such as SET-Secure Electronic Transactions-which was designed for larger credit card payments. MiniPay, for example, would cost less than a cent per transaction and would enable instantaneous "pay per click," with no elaborate instructions required.
Mr. Herzberg described Millicent as inconvenient and well short of the "pay per click" ideal.