Micropayments History

Hey, remember that period when there were like a ton of online 'coins' that people are trying to make happen? And they all kind of wanted to be 'the one', they all involved some kind of crypto thing you didn't totally understand, and they'd all enable micropayments and also solve all of these interesting problems about money. Remember when people were like "let's make an IETF standard!" and others were like "this is a thing we should do at the W3C"? And then some really big companies got involved? Do you remember that time... in the mid to late 90s?

Because, it totally happened.

Check out this draft of Micro Payment Transfer Protocol (MPTP) Version 0.1 from November 1995, and just have a look at the abstract and references section and note how many proposals there already were in 1995. They're pretty hard to find today, unfortunately, lost to the bitrot of time, but here's one, probably slightly updated version (it's dated May 7, 1996) that I was able to dig up as a postscript file and convert to pdf. It's focused on how you can mint coins cryptographically, and the cost of it and how you can prevent forgery and theft of coins and so on.

There are minutes from a joint CommerceNet/W3C Electronic Payments Initiative Kickoff meeting which took place in Paris December 18, 1995 which was attended by 50+ people from a wide variety of companies from banking and credit cards to telecom and hardwardware systems. In it there is a mention already of "the people looking at micropayments" and pointing out that "with credit card systems there's usually a minimum dollar amount below which a transaction isn't profitable."

There's this Jan 1996 IETF draft for Application Level Internet Payment Syntax, and in Feb 1997 there was another meeting in Paris in which they discussed micropayments and then again in Brussels in Sept 1997. There's this grab from W3C's Payments Roadmap (the oldest grab here is from 1997, but it's probably older). Look how much there is!

There's also this link is to a public w3c page which has a lot of links to things which were "already working (more or less)".

IBM tried this minipay thing. Carnegie Mellon developed this NETBILL PROJECT in 1997.

Jakob Nielsen's Alertbox had a piece in early 1998: The Case for Micropayments - in which he said "I predict that most sites that are not financed through traditional product sales will move to micropayments in less than two years." Then about two years later he doubled down saying "I now finally believe that the first wave of micropayment services will hit in 2000."

He wasn't totally wrong, because then there was Beanz.

It was huge. Here's a whole 20 minute video someone did on Beanz. But, in short, it earned multiple big rounds of tens of million dollar funding, even $5m just from Larry Ellison. It had posh offices worldwide and really got a lot of attention. I guess it started out as mainly a thing like "loyalty points" but that you could spend anywhere. Everyone had loyalty points, but you could only spend them there. So maybe you smoked Marlboro - you earned "Marlboro Miles" and could trade them in for stuff in their catalog. The idea was "why not let me spend my Marlboro miles toward kinda whatever I want". In the end, that sounds a lot like "almost money". Today, I guess credit cards have subsumed this a bit, you can get cash back rewards or other things.

But, it was also totally new and it had a lot of competitors. Around 2000 we got a big one: Flooz with Whoopi making commercials!

And in that same year we also got My Points (still around), Netscentives, CyberGold (quickly aquired by MyPoints for $157m), internetcash.com and even Confinity x.com PayPal. At the same time all of the new tech was helping regular old transaction costs come down too.

And then the internet bubble burst.

And then Clay Shirky wrote "The case against micropayments" which argued pretty strongly that they're just a bad idea.

It seems the W3C work on this also stopped around that time, in 2001.

I guess it's never totally stopped. There was, for a minute, Simpay - a consortium formed in 2003 by Orange, T-Mobile, Vodafone, and Telefónica to promote mobile payment solutions across Europe (wow that was 20 years ago?!), and as I say some of those things above still exist, as do other things like fetch.com and, others have been integrated into existing systems more as Clay Shirky predicted. And, well, of course, there was Bitcoin in 2008 and tons of crypto coins that followed.

Along the way, in March 2014 the W3C had a workshop on web payments in Paris which discussed also "new virtual currencies". Ultimately, the W3C work restarted in 2015 to streamline the online “check-out” process and make payments easier and more secure on the Web under the new "Web Payments Working Group."

Anyway, it was an interesting rabbit hole to dive down, prompted by a number of recent discussions I've had on the health of the web ecosystem and the number of times that something like micropayments seems to come up. I'll write more about some of those discussions and thoughts in a future post.

Thanks to my good friend Coralie Mercier for pointing at the rabbit hole and pushing me into it :) And also for a number of pointers and links.