In: Computers and Technology

Submitted By trash
Words 11078
Pages 45
Journal of Electronic Commerce Research, VOL. 5, NO.4, 2004

Michelle Baddeley
Gonville & Caius College and Faculty of Economics and Politics, Cambridge, UK ABSTRACT
The growth of electronic commerce is dependent upon the emergence of effective electronic payment systems.
Whilst payments for large purchases can be made relatively easily using credit/debit cards, small-scale electronic commerce is constrained by the limited nature of existing e-cash (or ‘micropayments’) systems. This paper outlines the evolution of electronic payment systems, leading to an analysis of the essential characteristics of e-cash, and microeconomic / macroeconomic implications of the development of e-cash. Finally, the key characteristics of successful electronic payment innovations are analysed using binary dependent variable estimation techniques on data derived from the Electronic Payments Systems Observatory (ePSO) database.
Keywords: e-cash, micro-payment systems, e-commerce

Electronic commerce is growing at an increasing pace and financial instruments are adapting to the increased volume of spending taking place over the Internet (Economides, 2001). Until now, most buyers have used credit arrangements or checking accounts as the principle means of paying for Internet purchases. There is however, a
'price umbrella' underneath credit-card transactions that makes them an excessively costly financial instrument for low-value purchases (Rivest, 1998). Given the transactions costs involved with card transactions, the opportunity gap that remains in terms of e-money products lies in developing a popular alternative to conventional cash as a convenient way to make small payments (‘micropayments’1). For many Internet transactions, electronic cash (ecash) could…...

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