Online shopaholics are apparently no longer quaking at the prospect of cyberhackers making merry with their credit card details, judging by the amount of shopping being done over the Net. But one Internet commerce boon long promised has been slow to make its appearance - the microtransaction.
Microtransactions are small transactions ranging from fractions of a penny up to a few pounds. They are just too small to be economic, given today's commercial cost infrastructure. Today, processing a microtransaction is so dear that vendors may net less than 50 per cent of the revenue on small sales. Until microtransactions arrive, vendors will have to manoeuvre the buyer into open billing accounts, subscriptions or membership clubs, a much tougher "sell".
The invisible majority of future electronic commerce has been set back by the lack of a widely acceptable payment device for microtransactions. Even the rapid creation of secure credit-card payment methods does not solve the problem. The most exciting business opportunities yet to come involve selling at very low prices small pieces of information to a large, low-density market. The Internet provides the opportunity of marketing chapters of a book, essential information bites or software that you pay pennies for each time you use it.
Jeff Bezos, the entrepreneur who created Amazon.com, the "Earth's biggest bookstore" has a taken the view that technology creates new markets in two distinct waves. The first wave sees companies simply automating the old way of doing things, improving productivity and cutting costs. Rarely does it replace existing business methods.
Sweeping changes come with the second wave of innovation: companies find that the new technology allows them to completely change the process of their business. Mr Bezos is looking to the day when he can sell pages of books online, not books delivered expensively by the hand of a postman. That future will require a way to make microtransactions pay.
It is still the source of much conjecture exactly how many Internet users are out there, but estimates range between 30 million and 80 million. Even the most conservative projections say Net use is bound to grow, as the information superhighway begins to reach homes via set-top boxes. Hundreds of millions of users will be online in one way or another.
For companies willing to ride Mr Bezos's second wave, the sky is the limit. Publishing is a prime target for the microtransaction revolution. You will buy newspapers by article, reference books by the entry, your favourite cartoons by the day and music by the song.
Online gaming will let you wager 10p a go - just like down the pub. You will be able to purchase online services like those offered by Internet search engines, weather predictions, stock tickers and movie reviews without having to buy that information in its current aggregated form.
Would you shrink from paying a penny for an Alta Vista search? Probably not - and neither would any of the other 12 million users of that Internet search facility each month. Do the maths: if each user does 20 searches (or one each business day of the month) that is pounds 2.4m in income a month at today's traffic - in addition to the substantial advertising revenue that such a busy site earns.
There has been slow but continuous development of microtransaction technology, yet few consumers and merchants have clasped the new capabilities to their collective bosoms. A small handful of companies provide microtransaction systems. The main players include DigiCash's ecash (http://www. digicash.com/ ecash), CyberCash's CyberCoin (http://www.cybercash.com/), and IBM's MiniPay (http://www.ibm. net.il/ibm_il/int-lab/mpay).
These pioneers provide the equivalent of electronic "wallets" with tokens for consumers and merchants to use online, and work in concert with a small coterie of innovative banks to settle electronic cash transactions in a similar fashion to ordinary credit cards. DigiCash has won the attention of four European banks.
CyberCoin has joined with Barclays to create BarclayCoin, which you can use to buy weather predictions direct from the Met Office (http://www.barclaycoin/barclaycoin.co.uk) or a recipe for coriander chicken.
It may be the software industry itself that will make the first big push towards microtransactions as it finds the traditional means of selling products reaches saturation. The answer software companies are pinning their hopes on is microtransaction-mediated, usage-based pricing. Why pay hundred of pounds for word processor software if there is a way to pay just, say, 50p every day you use it?
The marketing research firm Forrester predicts the microtransaction market will pick up in three to five years, as big players like Visa Cash, Mondex International, and American Express make smart cards more readily available to computer users. Familiarity is important for gaining consumer confidence and smart cards have the benefit that they can be used in both the online and offline world.
In the final analysis it is consumer behaviour - not technology or commercial interests - that will drive the acceptance of electronic commerce. When it all comes together, there will be any number of fortunes to be made at a penny at a time.