By William Fellows
The return of pay per view or the micro transaction is being driven by Seattle’s Qpass Inc, but Silicon Alley rival Cha! Technologies Inc is set to give chase with its 1ClickCharge system that should go live some time in the Fall.
Small dollar transactions – micropayments – on the internet failed because the solutions, including Cybercash’s Cybercoin, DigiCash and DEC’s Millicent were overdesigned, clunky or required the customer to load digital money on their PC, says Cha!’ s director of product management Scott Samios. Moreover their design philosophy was based on the supposed need to support smaller transactions than credits cards. That’s why mainstream e- commerce order fulfillment companies have tended to write off pay per view as a dead in the water, claiming the web’s main form of e-commerce is and will continue to be macro transactions. Credit cards, as it turns out, are well suited to e-commerce. But with small dollar payment systems having been successfully rolled out by Qpass for Wall Street Journal, Bloomberg, PR NewsWire and Morningstar, and to British Telecommunications Plc’s Array merchants, it’s clear a market is developing. The usual technology shakeout is now occurring under our noses.
Cha!’s 1ClickCharge software is in alpha, being tested against merchant services such as the SEC Edgar database where it is testing pay-per-filing. It counts Miller Freeman amongst its clients. The software betas in June and should ship in the Fall. Cha! Will back it with a marketing campaign in the fourth quarter. It says that its software differs from Qpass in a number of ways. Qpass requires installation on a merchant’s server, costs $50,000 and up and it takes a 30% commission on transactions. IClickCharge is free to merchants and requires no server software to be installed. Instead users download a 200Kb C++ client that acts as virtual wallet charged with a credit card limit of no less than $10. Cha! hosts the server and software that stores customer records and balances, provides spending reports and does the back-end order processing. Merchants provide Cha! with URLs for content that a web user can pay for. It intercepts HTTP requests to those URLs and asks users if they want to buy the content (Cha! is starting with digital content, and is mostly targeting the lucrative financial service information market to begin with). It will also offer to download the 1ClickCharge client (Windows32 only in the alpha version). Cha! claims 1ClickCharge’s security protocol guarantees content delivery thereby reducing chargebacks, that the thin client works in one click there’s no clicking on a QPass graphic to buy and doesn’t require the user to remember and type in user names and passwords.
Cha! says it charges between 8% and 20% per transaction and is aimed at the market for transactions of under $20. 12% of the US economy is comprised of payments of under $20 though virtually none is done on the web because of the high cost of processing individual transactions for small amounts. For transactions below $15, Cha! claims 1ClickCharge is less expensive than what a merchant would pay to process a credit card itself, especially for transactions below $4. 1ClickCharge costs about the same as credit cards for transactions above $15.
Cha!’s already thinking of being able to offer one-day passes to web sites and has tabled a plan to offer parents the ability to effectively pre-charge allowance accounts for children who could then go off and spend on small web transactions. Promotions are likely to include advertisements that offer some limited free access to a paid-for resource when a user charges up a client or perhaps matching an initial $10 charged to a client by giving away $10 of paid-for services.
1996 start-up Cha!’s $1.5m angel funding came from the same Israeli backer of Mirabilis Ltd which sold its ICQ internet chat and messaging system to America Online Inc for $287m off last year. It was created to research authentication techniques. Moreover 15-person Cha! inhabits the Broadway office space in Soho that Mirablis vacated. Toav Leitersdorf, Cha! CTO also created a peer-to-peer authentication add-on for ICQ. Cha! took 1ClickCharge to the recent PC Forum and says the phone hasn’t stopped ringing since. It’s looking to raise between $5m and $10m VC money to get the software to market. Samios believes a smoother, less disruptive consumer and merchant solution will revive the micropayment category. Moreover, the current advertising and/or large subscription revenue model just won’t support the kind of really valuable content consumers want. More choice will gradually make the web more useful, he says.
