MilliCent Micropayment System

March 1998

Digital Equipment Corporation has recently launched a worldwide public trial of its MilliCent microcommerce system. Initially it will be a free trial, during which time users can download a wallet and load $10 of scrip into their wallet for free.

MilliCent uses a system of electronic currency called scrip. The scrip can be used on the Internet to purchase electronic information and other forms of electronic content from vendors. It is intended for small value transactions, from a minimum of one cent ($.01) or less to a maximum of approximately $5.00. Consumers purchase scrip from one or more brokers (broker scrip) but before spending it, it needs to be converted in to vendor specific script (vendor scrip).

The system is comprised of three software components:

The wallet is used to buy and hold broker scrip, convert broker scrip back and forth to vendor scrip as needed, and spend scrip in exchange for vendor content.
The vendor server performs two principal functions: administering content pricing, and validating scrip used for payment.
The broker server converts real money into scrip and converts different forms of scrip used by different vendors or content providers.

In the following sections we explore these three pieces of software and assess the overall impact on merchants and consumers.

The wallet software is a hefty 4.5MB download and this takes about 20-30 minutes over a 28.8K modem. Wallet software is currently only available for Windows 95 and NT (Intel) operating systems. Once downloaded the self-executing file installs quickly and easily. Configuration is automatic for Netscape’s Navigator 3.0 and above and Microsoft’s Internet Explorer 3.02 or above. Other browsers can be used but these need to be configured manually.

The next step is to load the wallet with some vendor scrip. In the live system, this would involve selecting a broker and using a credit or debit card to buy scrip. However, in this trial a dummy broker is used to automatically load the wallet with $10 of free scrip.

Paying for purchases is simple. At a participating vendor’s site the customer simply clicks on a link to purchase an item and, depending on how the user has configured their wallet, the amount is either automatically debited from the wallet or the user is asked to confirm the purchase.

Millicent Wallet The main advantages for consumers is that they no longer need to give their credit card numbers to multiple Web sites, or maintain accounts and passwords with hundreds of vendors. They need only to select a primary broker, purchase $10 or $20 of scrip typically with a credit card, and then they can securely surf the Web to make their purchases.

The MilliCent vendor server is implemented as a server-side proxy server that intercepts URL requests (for both payment and non-payment pages) headed for the Web server. It handles the payment processing if needed, and forwards the request on to a standard Web server. This allows it to work with a large variety of Web servers. The trial vendor server software works with Netscape, Microsoft and Apache servers but is limited to Windows 95 and NT (Intel) operating systems. Vendors using other operating systems can still take part in the trial, as MilliCent will provide access to an NT server.

The vendor server is the server-side equivalent of the wallet. When started, it loads a price configuration file that describes the payment and reward attributes associated with each URL. Like the wallet, the vendor server interacts with each HTTP request to process and handle scrip embedded in the HTTP header. Because the MilliCent protocol is implemented as an extension to HTTP business users who sit behind a corporate firewall can still use the system.

With each URL request, the vendor server extracts payment in the form of scrip to check for tampering or theft. It checks an in-memory vector array to test for double spending. It maps the URL against the pre-loaded price file to determine how to handle each request. It also returns change and generates rewards, both in the form of scrip, which are returned back to the consumer with requested content. Spent scrip and all scrip transactions are logged to disk at regular intervals.

There are two options available for using the vendor server, either to host the Web site with an ISP who is participating in the MilliCent program or to run the software on an in-house server.

To work with a participating ISP, the merchant needs to download a pricing tool from the MilliCent site. The pricing tool is used to create a price file that associates a cost (or benefit) with each URL on the merchant’s Web site. The tool allows for costs to be assigned on a server-wide basis, a directory-to-directory basis or a per-URL basis. The resultant price file is then uploaded to the ISP along with a document tree that maps the structure of the merchant’s Web site.

To host the MilliCent system in house, the merchant needs to download and install the vendor server software as well as the pricing tool.

Once the software is set up, the final step is for the merchant to select and license a broker to sell their scrip. Although there are no real brokers currently taking part in the trial, MilliCent envisage that there will eventually be a number of brokers for merchants to chose from. For now, the merchant needs to license the MilliCent demonstration broker to sell their scrip.

The MilliCent system offers many potential advantages for the Web store merchant.

They can simultaneously sell content by the click and by subscriptions, while at the same time offering promotional incentives for first-time visitors or frequent users. And whilst traditional subscription or pay-per-view systems require the merchant to create and manage thousands of accounts, the use of brokers frees the MilliCent merchant from this. And finally those dreaded chargebacks and overdue accounts are eliminated as customers prepay for all services.

The MilliCent system uses brokers as trusted third parties that act as intermediaries between merchants and consumers. As a merchant, you simply contract with a broker to sell scrip to your customer at face value. Brokers pay you, subtracting out their service fee, just as soon as they sell scrip.

Real money flows outside of the MilliCent system from consumers through brokers and on to merchants. Because all online purchasing is handled through vendor-specific scrip, verification is quick, easy and automatic, allowing for extremely fast per-click purchases.

Typical brokers can be large financial institutions such as banks, credit card companies, or financial clearinghouses. They can also be Internet Service Providers or Online Service Providers.

During the current phase of the trial there are no real brokers taking part so merchants need to use the demonstration broker to sell their scrip.

The second phase of the trial is scheduled to start during spring 1998, and will involve real broker partners, buying and selling scrip for hard cash.

Will micropayment systems like MilliCent be successful? Read Paul Lang’s opinion and let us know what you think.

MilliCent Micropayment System – Product Review

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