re: microcurrency proposal

["Albert P. Franco, II" <apf2@apf2.com>]

>Date: Thu, 01 Oct 98 16:20:35 -0700
>From: "Vladimir Z. Nuri" <vznuri@netcom.com>

snip... 

>but I think this is a very promising approach. a company
>can create a plugin that would support microcurrency charges
>for web page hits very easily. 
>
>here's how: the plugin interacts with any site that has
>enabled it. it sends a code to the site using a protocol.
>the site returns pages only upon a valid transaction request.
>for regular browsers without the plugin, the message is,
>"sorry, this page costs $.01, please download so-and-so
>plugin".
>
...

>how would the cash charge work? when the person gets the 
>plugin, they give the plugin company their credit card
>number. the company takes care of the problem of accruing
>micro charges, keeping track of transactions/bills, and 
>billing the credit card in large amounts.
>

Here in Spain prepay telephone cards for cell phones are quite popular. The
idea is that you buy a card for 5000 pesetas ($35) and make calls until it
is exhausted then you get another. As a manner of getting something going
why not charge $5 OR $10 for the download and discount away until the
plug-in is empty. Obviously, there needs to be some way to make sure the
customer doesn't tinker with the value remaining. Pretty much all of the
technology for distribution is already easily available and as mentioned
further on in your letter the amounts are so small that fraud shouldn't be
too much of an issue.

The page generators side is likewise straight forward as they collect the
charge amount and plugin certificate number which they send as a file
periodically to the plugin provider who verifies that no "major" fraud has
occurred and then disburses the funds (minus commission) to the content
provider. Don't get to nervous about the plugin certificate number. These
numbers would not be used to link to a particular user, but rather to make
sure that a $5 dollar cert only runs up $5 of charges after which it is
blocked.

>the problem is trying to transfer money to various individuals
>if their microcharge accounts have a net positive value instead
>of negative (in which case they would be charged their credit
>card at the end of the month). how do you transfer this money?
>
This situation may be addressable in (at least) two ways. Issue a limited
value plugin say for 50 cent increments or incorporate a mechanism for
crediting the plugin. I prefer the first method since the second may make
the system more vulnerable.

>of course, I'm leaving the issue of taxes out of this, but
>the microcharge company could be a point of collection for
>them.
>
The plugin issuer should not be required to be an expert in international
tax law. I think an annual statement of payments sent to the content
provider would probably be sufficient. The concept is that the content
provider has not sold services or content to 50,000 individuals but rather
one customer. I think that pretty much all countries have existing methods
of controlling and collecting taxes based on the income derived from sales
activities. There is no need to make the task of the plugin issuer more
difficult.

>notice that none of what I am proposing above requires any
>new infrastructure whatsoever, except a little programming
>into a plugin. the distribution of the plugin is partly solved
>in that plugins are already distributed all over the net
>and understood by end-users.
>
As my suggestions above demonstrate, I agree that this is perhaps the most
likely way that a "grassroots" based microcurrency system could actually
get off the ground. There is absolutely nothing in this plan that mandates
the participation of major financial entities, which seems to be a major
bottleneck for other systems. (Besides the fact that the big guys don't
seem interested in truly "micro" transactions) This is in fact something
that could very well grow in Internet time scale rather than (conservative)
bankers time.

Al Franco, II