Rudiger Grimm, e-payment expert at the Technical University of Ilmenau, on the end of digital coins
The "Salt of the Internet" the digital coins should become one day. But after the end of December for the CyberCoins of the CyberCash GmbH, now also the Deutsche Bank 24 has stopped its project eCash, which was started in autumn 1998. Although eCash inventor David Chaum made anonymous online payments possible with his ingenious process, online consumers were conservative.
This is confirmed by the latest survey of the "Internet Shopping Report". According to the survey, four out of five web shoppers prefer traditional payment methods. Three out of ten also pay online by direct debit, 27 percent by credit card. In contrast, only 0.9 percent of all online shoppers wanted to buy electronic money. Paying by cell phone – Paybox lets you dig – was at least able to achieve a respectable success rate of 2 percent (Paying by cell phone).
Stefan Krempl spoke with Rudiger Grimm, who conducts research at the Institute for Media and Communication Studies at the Technical University of Illmenau with a focus on e-commerce payments, about the industry’s problems and prospects.
There has long been the mantra that e-commerce won’t really take off until secure payment methods are available. On the other hand, web stores report that consumers are using their credit cards to make purchases "uninhibited" Paying by credit card. Do we really need new procedures? Rudiger Grimm: Surfers are not that uninhibited. There is a great deal of uncertainty among most consumers about the confidentiality of data transmission. Even if many merchants today rely on locking mechanisms, online shoppers are still uncertain whether their data will end up in the right hands. Only a small segment of consumers therefore use credit cards carelessly online. These are the ones who already know their trading partner. With credit cards, therefore, a payment system has found its field of application – but the market is not yet exhausted. Especially not on the open Internet, where you may do only one transaction with a seller and still demand legal certainty. So we need secure payment systems for the network. But it’s a chicken-and-egg problem: New payment methods won’t take off without good business, it has to be mutually stimulating. At the moment we are in a blockade situation. We do not yet have a convincing system that covers all market segments. There will probably be several of these, although the interplay between individual methods is still unclear. The market has to find itself first, providers do not yet know what to bet on. There have already been numerous experiments with mature, technologically advanced payment systems such as eCash. What went wrong? Rudiger Grimm: Those were head births, especially eCash. This appealed mainly to intellectuals who were fascinated by the idea of anonymizing cybermunks. Transferring the cash model to the Internet was a rough intellectual task. And David Chaum, the inventor of eCash, has solved it with an ingenious trick by using different capping methods on a mathematical level. At the same time, however, eCash is a constant challenge: it demonstrates that a solution needed for data protection is indeed technically feasible. The other bad news was the end of CyberCash in Germany. Rudiger Grimm: CyberCash had a great name, with which many even identify the whole scene. But customers are not willing to download a new software if there is no real benefit behind it. And with CyberCash you could buy as good as nothing online. So there was still some work to be done to get CyberCoins into the hands of more handlers and consumers. The banks decided that the whole thing is not so important to them as a demonstration object. They just did not feel like it anymore. Especially since in Germany high license fees were charged to the American parent company, which were not compensated by corresponding profit prospects. What about SET (Secure Electronic Transaction), another dormant standard for secure online payments?? Rudiger Grimm: If SET was in the hands of a single provider like CyberCash, it would probably have disappeared from the market by now. But so some providers still try around with it. They also realized that people don’t want to install additional software in their homes. So the idea was born to run SET via the provider’s server. Maybe it will be successful now. At least new product offerings for this area are now coming to the market. Do you see signs of a change in sentiment? Rudiger Grimm: Online shopping is all about fair exchange of goods and the relationship between payment promise and payment redemption. It is possible that business-to-business will create a different kind of prere for the use of new methods, which will then be made available to the end-user in slimmed-down versions. There is still a lot to come. Will we see a revival of systems that have already been declared dead, or do you give completely new developments a better chance?? Rudiger Grimm: eCash can definitely rise again, at the latest when electronic payment is generally accepted. And above all, when the data protection ie is raised once again. In the case of credit cards, every transaction is recorded worldwide, so that immense data traces are created. This has a positive aspect in the service area, because I always get a list of what I bought, when and where. But actually you don’t need a central recording for that, that could also happen in the intelligent end devices at the consumers themselves. If the idea of data protection comes to the fore again, which can be amed in the current amendment phase of the Federal Data Protection Act, eCash may at least have a chance as a challenge and a standard of comparison. In my opinion, Deutsche Bank would have been well advised not to simply discontinue its eCash project. What chances do you give Paybox, which is causing a stir with payment by cell phone?? Rudiger Grimm: The system shows how multiple media can be linked together. The surfer clicks the appropriate buttons on the Web – and suddenly the cell phone rings to confirm the charge. The cell phone serves as an additional security instrument. Taken by itself, the system is already quite clever. Whether this alone is enough to establish a market-penetrating payment system by a relatively small provider with international competition remains to be seen. It’s possible that Paybox will disappear from the market again – but the idea certainly won’t. What are the advantages and disadvantages of Paybox for the consumer?? Rudiger Grimm: If one accepts the thesis that soon everyone will have a cell phone, then the system starts with an everyday device. The customer has to do nothing more than register with Paybox to be able to pay. Paybox picks up the consumer where he is and where he knows his way around. He can use it without having an Internet connection. The payment model is also quite obvious, one feels safe: I am asked before a debit, whether it is correct. Our tests have shown, however, that the system is not 100% secure. It has a problem that it shares with all technical communication systems: When communication breaks down, the customer is relatively helpless. What happens if the Internet connection is interrupted after the payment has already been confirmed?? Is it now arrived? Need to repeat the process? It lacks a kind of button where the consumer can check the status of his transactions. More service is needed. What data traces are recorded at Paybox? Rudiger Grimm: That’s another problem: Paybox also knows almost everything, at least who transferred how much money to whom. It remains unclear for which service the amount was spent. But of course you can often think of them: in the case of a cab company it could be a cab ride, in the case of a nightclub you don’t need much imagination to decide on the service. How we will pay in five years? With cash, via the Internet or via cell phone? Rudiger Grimm: Cash will remain just as the book will still exist. But it will be partly supplemented by card systems. I definitely give the GeldKarte a chance, even if its use as a payment medium is off to a slow start. The moment the vending machine manufacturers get involved with the GeldKarte, it will be unbeatably convenient. The question is whether the medium can be transferred to the Internet as well. At the moment we have the problem with the card readers, and payment abroad does not work with them yet either. With predictions about the other standards and payment systems is no more possible than a fishing in the pond.