Golbal Econ.

[Robert Hettinga]

At 10:10 PM 8/28/94 +0100, p.v.mcmahon.rea0803 at oasis.icl.co.uk wrote:

>But what I have still not seen in this thread is an articulation
>of a business case for existing financial institutions to support
>the putative [on|off]-line payment mechanisms - in particular as an
>alternative to charge/credit cards for one-off transactions.

I'd like to take a crack at this one. In the offline business model I'm
mucking around with, the bank is responsible for "vouching" for the
purchaser. An ATM gateway (which requires a bank) is how cash is sent to
and from the underwriter. This cash is used to pay for and collateralize
the digital certificates. And when cash is brought off of the net, the ATM
gate serves as a place to send a "deposit" of the redeemer's cash.

Banks get a commission for this. In addition, an institutional bank is also
the trustee for the suspension account, which collateralizes the cash on
the net. There are fees for that.

The mechanics of getting paid are pretty straightforward.  The size of the
market is probably the most important question. I hold no illusions about
this, but I think the costs of entry are still such that with reasonable
royalty demands and with falling prices for equipment and network access a
business could be started the proverbial garage (OK, 1000 ft or less of
class b office space) and survive.  Costs of entry will continue to go up,
however.

Cheers,

Bob Hettinga



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