Last week's demise of CyberCash Inc. marked a noteworthy ending: the final implosion of the last major firm standing that had helped start the Internet payments boom of the mid-1990s.

CyberCash's bankruptcy, declared on Friday, calls for a little nostalgia. Going way back in time, before there were a lot of things to buy on the Internet and before people went there to buy them - we're talking five, six years ago - a host of young companies like CyberCash wanted to "own" the online payments space. They had visionary founders and whiz-bang technology, and, for a while, their amazing credentials brought them all the money in the world.

Back then, the square old bankers were sitting on the sidelines, pothering about whether the Internet was safe for transactions. The hip entrepreneurs and their newfangled payment start-ups were positioning themselves to dominate the way goods were bought and sold online.

And what a roster they were. CyberCash was founded by William N. Melton, the man who built Verifone Inc. from scratch, helped make credit card authorization terminals omnipresent, and sold his point of sale empire to Hewlett-Packard Co. for a pretty penny. Digicash Inc. was founded by David Chaum, the genius academic and cryptographer, who was trying to put some of his 17 U.S. patents into commercial use. First Virtual Holdings Inc. was anchored by payment and messaging technology from three of the nation's most prominent Internet engineers and was fronted by a flashy marketing guy, Lee H. Stein, who had once managed the careers of celebrities such as Rod Stewart and Matthew Broderick.

These companies seemed to "get" the Internet before the banks and the general populace did, and their high-energy leaders set out to make the rules for the technological mortals whom they expected would soon want to come online.

The entrepreneurs succeeded in many respects. They laid groundwork for the way business is done on the Internet, and allayed some fears about online security and the integrity of the payments system. And many of their predictions came true: People did migrate online, did want to buy things and conduct financial transactions there, did want the security of firewalls and encryption.

But they erred in assuming that people would need entirely new financial instruments to get these needs met, and that the currency we use down at the mall would have to be translated somehow for use online. For a spell, everyone took for granted that the World Wide Web was inherently unsafe for sensitive transactions, since it had grown out of academic and Defense Department networks that were generally used for sharing information, not shielding it.

So the entrepreneurs toiled at marketing cutely-named ways to pay for goods on the Internet - Cybercoins, e-Cash, VirtualPINs - that aimed to mimic the cash, checks, and cards of the real world. But it turned out that the products they had created were already superfluous.

For one thing, the systems were overengineered and cumbersome. They were way too baffling for the average America Online newbie. When CyberCash introduced its digital wallet, for example, Internet users had to download it from the company's Web site and set it up step by step, a process that usually involved reconfiguring one's browser. Indeed, after this writer failed to get the wallet up and running, some visiting CyberCash executives tried to install it on her office computer, and failed. Something about incompatibility with America Online, which was what many people had to use before their workstations got wired directly. It was 1996, eons ago in Internet time.

Meanwhile, the vendor companies were not the only ones placing eggs in this basket. Even the venerable Citibank was working hard on an e-money scheme, known internally as the Electronic Money System. This online payments system was said to be technically excellent, and had been developed over the years by some of the bank's finest minds. It was never brought to market.

Gradually, the people promoting digital cash, coins, checks, and other schemes were finding that the real answer to the Internet payments conundrum had been sitting in their wallets the entire time. Nobody today disputes that ordinary credit cards have won out as the primary payment instrument for the Internet, with ordinary debit cards coming in second.

Where are they now, all those firms that took for granted that nobody would ever type their card account numbers into the Internet? A few of the smaller ones have simply vanished, but the more prominent ones were bought by companies that scrapped the original business model and salvaged what they could of the technology and vision.

Digicash, which successfully licensed its eCash digital coin system to several large banks in Europe, went bankrupt in late 1998. Its patents and software were bought by a group of entrepreneurs who founded eCash Technologies Inc. in Bothell, Wash., and continue to market a secure Internet payments system, albeit one that relies on conventional payment instruments rather than anonymous, elaborately encrypted digital coins.

Only one U.S. bank - Mark Twain Bankshares of St. Louis - ever licensed Digicash's eCash technology. The bank ran a modest pilot in 1996, a year before being acquired by Mercantile Bancorp, which in turn was bought by Firstar Corp.

Frank O. Trotter 3d, the enthusiastic Mark Twain vice president who ran the experiment (which required that people sign up for a deposit account at Mark Twain Bank before they could play around with eCash) is apparently still an Internet believer. He resurfaced last year as president and chief executive officer of Everbank.com, the Internet-only bank run by Wilmington Savings Fund Society.

First Virtual Holdings boasted of its offline system for securing online payments. First Virtual stored people's credit card account numbers off the Internet, and gave customers random passcodes, called VirtualPINs, to use when they wanted to buy goods at an Internet merchant - at least, at one of the handful of merchants that accepted them. The system never caught on, and First Virtual went bust and got reborn as MessageMedia, which sells e-messaging software for building customer relationships online.

MessageMedia is listed on the Nasdaq, counts the SoftBank group among its major investors, and lists such clients as E-Trade Group Inc., America Online, Barclays Bank, and Microsoft Corp. Mr. Stein is gone, and all the senior managers seem to have joined the company after it was no longer First Virtual, except in the holding company's name.

CyberCash had set out to build on its digital wallet by introducing "Cybercoins" and "Cyberchecks." The coins were supposed to be for micropayments - oh, there was so much talk of micropayments in those days, how people would want to be paying 10 cents to download a cartoon, or $3 for a popular song - and the Cyberchecks and card numbers were to be used for higher-ticket items. Now that much content on the Internet is free, and sites that sell $2.50 newspaper articles are happy to take credit cards, the original CyberCash sounds antique.


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