From: Pierre Uszynski <pierre@shell.portal.com>
Date: Fri, 22 Jul 94 20:56:20 PDT
To: cypherpunks@toad.com
Subject: Re: Voice/Fax Checks
Message-ID: <199407230357.UAA13442@jobe.shell.portal.com>
MIME-Version: 1.0
Content-Type: text/plain


A couple of pointers on current outfits trying to undercut the "transaction
cost", none of them the ultimate we all root for, but nonetheless.

hfinney@shell.portal.com writes
> Robert Hettinga writes:
> 
> >I've gotten stuck on
> >exactly how to "*undercut*" the transaction costs of existing methods.  Got
> >any ideas?
> 
> It's pretty clear that credit cards don't work for some of the transactions
> people want to do:
> [...]
> It's not that easy for a mail-order shoestring startup to get the ability to
> accept VISA cards.  Because of the danger of fraud, the credit card companies
> like to see a storefront and/or some previous history.  Someone who writes a
> nifty PGP shell and wants to sell it for $10 per will have this problem.

It's actually getting easier. Small card service outfits have noticed the
problem. They have looked at the danger of fraud, and when accepting a new
company, still conduct a sufficient investigation (so they claim :-). They
have also looked at the way small outfits operate. The result is that it
seems it is now possible for "home businesses" like BBS's or software
sellers to get cheaper service than store fronts. It comes out to something
like $25 a month + 2.5-3% per charge ($0.20 minimum per charge, $25 minimum
per month) + equipment, roughly, for VISA and Mastercard.

As an example, in the San Francisco area, try ... errr... <grumble>...
 (Darn it, I buried that guy's card... try the phone book :-)

> 3) People who don't like giving out their credit card numbers to an unknown
> email address.

Or to a small random unknown business... Which is a problem even if
everybody could accept VISA, as you mentioned. 

Others already mentioned on the list the 1-900 phone based "netcash" <shrug>
service described in July 1994 Boardwatch Magazine. You call the 900
number with your modem, you get a random string for it, and your phone
company bills you $10 (info at netbank-info@agents.com). You then can get
change (down to $0.25 strings), do on-line validation of transactions,
and eventually redeem the strings, minus a 20% redemption fee.
In addition to that one service, I already heard
of two others that cater in particular to BBS's, similar system where
you get billed $10 for a 900 call, and get a random string to use as a
voucher. These two don't let you "get change" or any similar facility,
but they let small businesses get rid of the "collection" process, for
a fee. In all these cases, the fee is around 20-25%, so there may be
space for competition (I don't have the coordinates for these, just
know where to ask).

That was/is actually the strong point of the French Minitel system
(as much as I can't stand that piece of plastic ****):
Minitel services are accessed (mostly) through 900 style numbers, and
France Telecom handles all the billing and collection for the Minitel
service providers, allowing charges as low as 7 cents per call to a
service (most are much higher, WAY higher).

We already discussed the "phone check" idea, even Western Union
advertised it, and maybe even provides it :-)

Clearly all these systems have disadvantages, and are some way from what
some of us want, but they show that the current "billing" services
are not standing still, and are working on this access barrier to credit
card payment. Clearly too, they don't seem to be working in the direction
we want.

Pierre.
pierre@shell.portal.com