Second generation micropayment systems: lessons learned

In the next years the market for low value products such as online music and videos and the role of micropayment systems for selling such products are expected to grow substantially. The first generation micropayment systems appeared around 1994, with systems such as eCash, MilliCent and CyberCoin. These systems were unable to gain market share, however, and disappeared slowly in the late 1990s. The second generation micropayment systems appeared around 1999-2000, and are still operational. In this paper we present an overview of first and second generation micropayment systems, and compare their key characteristics to determine their success or failure. This paper explains why the first generation systems failed and concludes that second generation systems have a better chance for success than their predecessors.