KDD Communications Inc. (KCOM) and Compaq Computer KK this month jointly inaugurated the world’s first commercial application of Compaq’s MilliCent micro-commerce electronic sales system.
Japanese users can download MilliCent “scrip” (electronic currency) from
KCOM’s NetCoin Center, and use it to purchase low-cost digital contents from stores in a KCOM-hosted virtual shopping mall. MilliCent can handle online transactions in units as small as 0.1 yen (less than US$0.001).
This makes it ideal for the instantaneous online purchase of small-unit digital content, such as a single newspaper article, an individual song, a digital photo or video clip, or game software.
“Until now, there has been no easy system for implementing true electronic commerce,” said KCOM. “With MilliCent, which allows anyone to buy and sell digital content, we will help pioneer development of the micro-electronic commerce market.”
The MilliCent system comprises three software components: a MilliCent Wallet (software installed on the user’s PC), a vendor server to
administer content pricing and validate scrip for payment, and a broker server (KCOM) that sells scrip to users and credits “spent” scrip to a particular vendor.
Encryption ensures that scrip can not be counterfeited, altered, stolen, or spent more than once.
A Japanese user can purchase MilliCent scrip (with a credit card) from KCOM’s NetCoin Center in units of 1,000 yen (US$8.20). The scrip value is stored in the user’s MilliCent Wallet, which can hold a maximum scrip value of 3,000 yen (US$24.50). The cost of a user’s digital content downloads is automatically deducted from the MilliCent Wallet and credited to the merchant’s account.
Although Compaq has been conducting micro-commerce experiments worldwide, KCOM’s Millicent Islands virtual mall, which went online on June 1, is the first commercial application of MilliCent.
While 15 stores had reportedly signed up to participate in MilliCent Islands, to date only nine are open for business, with four others labeled “under construction.”
KCOM has set ambitious MilliCent revenue targets of 150 million yen (US$1.2 million) for the first year of operation, and 1 billion yen (US$8.2 million) for the third year.
While the Internet has spawned numerous digital cash and micro-payment schemes, such as Ecash and CyberCoin, none has yet proved compelling enough to achieve widespread adoption by online merchants or consumers. Some 98 percent of all Internet transactions are still paid for by credit card.
KCOM and Compaq are hoping that MilliCent, which in 1998 received CommerceNet’s New Innovator’s Award, can buck the trend and fulfill CommerceNet CEO Randall Whiting’s prophecy that “micropayment solutions such as MilliCent have the potential to open the door to a multi-billion dollar online market for digital goods.”
