If the prophets are right, tomorrow's Internet commerce will be dominated by a flood of payments under $10, or micropayments, as Netizens happily pay for documents, admission to multi-player games sites, and whatever else the fertile minds of entrepreneurs can imagine.

Jupiter Communications, for instance, a New York-based research firm, estimates that by the turn of the century such payments will account for 80 percent of a greatly expanded Internet transactions universe, compared with 15 percent in 1996. Applied to Boston-based Forrester Research estimates of on-line consumer retail payments in the United States for the same periods, this means that by 2000, micropayments could total about $5.7 billion, compared with an estimated $79.5 million in 1996.

Startling numbers, indeed. And while the premise for this mushroom- like growth seems to be build it and they will come, the same idea could be used to explain the phenomenon of computer use, allowing even cynics to concede some basis for the assertions.

"We believe the supply side will come first," says Nicole Vanderbilt, a senior analyst at Jupiter. "Obviously the technology is already there, although the banks haven't taken up the possibility of making such small payments. But we think the field will grow as merchant will be able to offer products on-line for less than $10."

Little wonder, if anything like this amount of money is at stake, that at least six different micropayment plans are now afoot, all hoping to snare at least some of this business.

Among the six are four software-based programs: DigiCash Inc., CyberCash Inc., CertCo LLC, and Digital Equipment Corp. (DEC); and two hardware plans, one from Mondex International, the other from Visa.

American Express, which would be considered a likely entrant, says it's not planning to enter the market "at this time."

Of the six leading players, each software system, of course, has its unique and attractive qualities. DigiCash, which has been around the longest, offers complete user anonymity. CyberCash is well-suited for use by banks and offers several payments versions. CertCo's system, which debuted this spring, offers users anonymity but allows banks to aggregate user data for marketing-no surprise in a system designed by bankers; and DEC says its Millicent system is best-suited for use within a Web site, so that someone playing a war game, for instance, could buy more ammunition as needed. Each is likely to take some market share over the next few years; both DigiCash and CyberCash, for instance, are now competing head-to-head in Europe, Asia, Australia and the U.S.

In the longer term, though, analysts think that Visa and Mondex's hardware systems are likely to dominate the business. They point to strong brand recognition world-wide, and established relations with banks and merchants, as likely to tip the balance. And over time, they say-and software executives agree-it's entirely possible that the software products will be subsumed into the hardware systems as those big battalions look for ways to blanket the market with alternative offerings.

Which particular card takes the greatest market share, of course, is problematic; Visa relies on a system developed in England that works through a computer's A disk drive and requires installing a card in the computer; Mondex requires a smart card reader attached to the computer in some other way, which is supported in part by Hewlett-Packard Company's recent release of keyboards with these readers already installed.

But today, the game is between the software venders, mainly DigiCash and CyberCash. DigiCash, which more or less invented the business in 1990, recently moved its headquarters from Amsterdam to Silicon Valley, CA, and hired an American expert in electronic payments, Michael Nash, as CEO. Nash, who developed Visa's Visa Cash system-Visa is currently testing it with Bank of America in California and SunTrust Bank in Florida-is well- respected in the industry. He is expected to give competitors a run for their money as he re-directs a business that has been slow off the line, but which already has established programs in Europe, Japan and Australia.

CyberCash, on the other hand, whose business model runs to forming licensing deals with big banks in the same markets-not to mention Wells Fargo in the U.S.-is a public company, while DigiCash is private. So access to public capital markets may prove decisive.

But, says Judith Rosall, president of Worldscape Strategies, a Half Moon Bay, CA-based Internet business consultancy, the business is still young. "This is a market that's three-to-seven years out. If the size of the market is anything like what people think it is-and the Internet is a global store-there should be room for everybody."

-reinbach tfn.com

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