Electronic Payment Systems, Mac Web Servers, and Japanese Internet Magazines

by Forest Linton

Will Japan Become a World Leader in Electronic Commerce?

Electronic payment systems will shape the future of e-commerce. That may seem like an obvious statement, but it is important to remember that "electronic commerce" has been around for a long time. The excitement and hype of the past year have been about electronic payment schemes for the mass-market consumer. Unfortunately, there has been a lot of hyperbole going around about "digital this" and "cyber that" -- mostly from poor reporting in the press.

In fact, e-payment schemes aren't that confusing. Electronic payment schemes for the Internet can be grouped into three basic categories:

* electronic clearing of credit cards,

* digital cash, and

* smart cards.

The clearing of credit cards online is the easiest scheme to adapt to the Internet, since consumers can simply use their existing credit cards. A system is set up that allows a merchant to accept credit card numbers securely and obtain credit authorization almost immediately. This scheme represents the majority (perhaps 90%) of transactions taking place online right now. Online clearing systems include First Virtual, CyberCash, and MasterCard and Visa themselves -- with their new SET (secure electronic transactions) scheme -- as well as some big banks like Bank of America.

Digital cash is money that has no physical form. Digital coins or bills are created, downloaded from a special bank, and placed in a "digital wallet" on your hard drive. Special software allows you to easily transact with merchants and individuals alike. Digicash has proposed a digital money system called Ecash, and one bank is already supporting this scheme. Still, the number of vendors accepting Ecash is small, and their product offerings are limited to information and software. A couple of other small experiments are going on, however, and Cybercash is reported to be planning a digital money system that would compete with Ecash.

The smart card is a combination of a debit card (like an NTT prepaid phone card) and digital cash. The "money" is downloaded into a chip-embedded card instead of your computer's hard drive, perhaps at a bank-based machine, a special phone booth, or via a computer. You then spend the money by inserting the card into a card reader located at a store, bank, phone booth, private phone, or your computer (for spending online). The wallet-sized card reader lets you check the amount of money remaining on the card, keep notes, and make payments to other card-carrying individuals.

Proposed smart card systems use an encryption and tracking system similar to digital cash schemes, and they offer a strong combination of hardware and software security. Mondex is currently the biggest name in smart cards, and they are conducting several large pilot studies in Europe and Canada. (See the article on Mondex in Japan by Associate Editor Noriko Takezaki in our June 1996 issue.--Ed.)

The Mac as an Internet server

The days of scoffing at the Macintosh as a real platform are over. The Mac has always excelled as a great client machine and creation tool, and now it is really shining on the Internet. The percentage of Macs surfing on the Net is said to be around 20%, which is more than double its actual worldwide market share.

Great software has turned the Macintosh into a powerful Internet server as well. This is good news for publishers and marketers alike, as it lowers the cost and administrative barriers for setting up a presence on the Internet.

StarNine's WebSTAR is the highest selling Web server; it is the commercial version of the very popular shareware server, MacHTTP. WebSTAR is several times faster than MacHTTP and offers all the features of popular server software: CGI (common gateway interface) support, easy administration of realms and passwords, and easy suffix mapping for serving up any data format. A secure SSL version of WebSTAR was recently released in the US, and an international version (with 40-bit encryption) is now legally for sale in Japan. WebSTAR is available in Japan from Software Research Associates; point your browser to http://www.sra.co.jp/. You don't have to get the Japanese version to serve up Japanese language documents, however, and you can buy copies direct from StarNine in America, http://www.starnine.com/.

Everyware Corp.'s Butler SQL database, combined with a Web interface CGI called "Tango," provides a powerful engine for interactive Web sites. Webmasters can easily create online "shopping basket" ordering systems, Web catalogs, customer registration systems, and dynamic HTML pages on the fly. This is all done inside a graphical CGI editor, so knowledge of C++ or other programming language is not needed (although familiarity with HTML, scripting, and general database structure is important). To serve up Japanese, the localized version is required. Butler SQL is distributed in Japan by Uchida Yoko under the name of MyButler. Point your browser to http://www.uchida.co.jp/.

CGI scripts provide extra functionality between a Web server and a database or other applications, and are available for the Macintosh "ready to run." CGI functionality ranges from basic image mapping and hit counters to Web site searching and shopping basket systems. A Web Commerce Toolkit will soon be available for WebSTAR using First Virtual's payment scheme. This, combined with an SSL secure version of WebSTAR, promotes the Mac to the level of the high-end commercial servers. Many CGIs are available as freeware or shareware: check Jon Wiederspan's great CGI resource at http://www.comvista.com/net/www/ for more information.

Internet magazines in Japan (and why you should check them even if you can't read Japanese)

There are currently at least six Japanese magazines devoted to the Internet: Softbank's Internet User and Internet Guide, Internet Magazine by Impress, Internet Access by ASCII, Asahi's Doors, and Internet Surfer from A-I. The articles and information comes in a variety of flavors and levels, but there is definite value in regularly browsing one or two each month.

If you are in (or planning to get into) the industry, you can learn a lot just from browsing the ads: Japan's "Big Two," Internet Magazine and Internet User, are about one-third ads. If you are trying to find cool Japanese Web sites, Internet Guide categorizes over 600 URLS every month, complete with pictures and explanations (in Japanese, of course). And if you are looking for a technical round-up of Japan's infrastructure, Internet Magazine features dozens of pages in the back of every issue charting Japan's backbone, ISP pricing, busy times of the day for each provider, etc.

In general, Japan's Internet magazines offer much more than their Western counterparts, for both the beginner and professional alike. I suggest taking the time to look over any of them as often as you can. Plus, it's a great way to improve your Japanese.

Forest Linton lives in Tokyo and, when he's not surfing the Net, works at Koyosha Graphics. He can be reached by e-mail at forest@gol.com. Don't forget to check out his Japan Web Guide at its new
server, http://www.gol.com/jguide/.

Electronic payment predictions/opinions

In the US, electronic payment is quickly gaining favor with online clearing of credit cards. America's consumer habits favor the credit card, and it is a natural for shopping on the Web. However, I think the success of clearing credit cards online may be unique to the US, and that most American solutions are missing the point of a global electronic payment scheme.

The future of electronic payment systems doesn't rest on credit cards -- it rests on a replacement for cash. Credit cards are financial instruments in and of themselves, with the biggest features being ease-of-use, a 30-day float, and the ability to defer payment in a revolving charge. In the end, though, the debt to the credit card issuer is settled in cash. Credit cards will always exist independently of any electronic cash schemes.

The rest of the world does not use credit cards in the same way as America, however. So while the use of e-payment schemes in Japan and other countries may lag behind the US, it is not indicative of the future. In fact, Japan may have a chance to shape the future of global electronic payment.

The smart card represents the best candidate for a global electronic payment scheme. Human nature dictates that electronic money take a physical shape of some kind, and digital cash will be unable to bridge the gap to traditional shopping in real stores. The smart card, as described above, is viable both online and offline and so seems the perfect compromise.

Japan has embraced debit card systems in many walks of life. Japanese consumers are accustomed to using NTT phone cards and JR "orange cards" to buy train tickets every day. Making the jump to smart cards is a natural next step; it will be much easier to implement in Japan than in the US.

So, why can Japan dominate this new area? While America and Europe exist as "beta" test-beds for various e-payment schemes, Japan is in a position to choose the solution that makes the most sense. If smart cards show signs of becoming a global standard, Japan could lead the world in that direction. It is no small matter that many of the pilot tests are using cards and hardware manufactured by Japanese companies. And although many countries cringe at the thought of building a new infrastructure for smart cards, Japan relishes in it. Japan is very good at building infrastructure, and once it decides to adopt a system, it can create that system faster than any other country.

Once again, Japan has an opportunity to leap-frog technology and select the best solution from the start.