- The Washington Times - Monday, September 11, 2000

Microcreditcard.com could forever change the way the Internet is used.
Soon, some Web users will find themselves paying small fees, as low as 10 cents per service, to do a power search, watch a movie trailer, or read an article from an on-line newspaper. Those varying costs will be seen as early as October.
The Arlington company, established in July 1999, has created software that collects electronic commerce transactions of under $8 and puts them under one statement for on-line merchants and under one item on consumers' credit card statements.
So, what many consumers have been using for free, will very soon come at a price.
"It's [the software] not good for the consumers, but the sites aren't making any money," said Josh Penn, one of the company's principals. Microcreditcard.com helps electronic-commerce providers that would otherwise die to stay afloat. He said many electronic-commerce companies provide services, not tangible products. So, their only revenue streams are from advertisements.
The growth of on-line users is already slowing noticeably, according to data from BizRate.com, an electronic retail tracking firm based in Los Angeles.
The growth rate shot up 28 percent from 1997 to 1998, but slowed to 11 percent from the second quarter of 1999 to the second quarter of 2000.
At least 47 percent of American consumers are already technology pessimists, hostile or ambivalent toward anything high-tech and the Internet, according to Forrester Research, which surveyed 90,000 households in the United States and Canada earlier this year.
Undaunted by the slowdown, many on-line companies remain confident that they can make money on Web shopping.
Retailer J.C. Penney, for example, by simply becoming an on-line merchant, brought in $102 million in on-line revenue last year, according to BizRate.com. Last year, Southwest Airlines sold $725 million worth of tickets on line, or 16 percent of its revenue, according to PhoCusWright, an Internet travel research company in Sherman, Conn.
The Microcreditcard.com software provides fraud protection as well. Internet shoppers get a PIN for every credit card they register with the on-line merchant that has the software.
"When you register your credit card, that merchant doesn't get that information," said Justin Kayatin, another founder. "That's going to entice consumers who are currently afraid to shop on line using their credit cards."
So, consumers do not have to pull out their credit cards every time they want to make a purchase.
"It lowers the overall costs of processing charges [for merchants]," said Mr. Kayatin. "And we're complementary to the credit card industry."
Because the software prevents fraud and people stealing credit card numbers, the credit card companies have fewer charge backs, Mr. Penn explained. Microcreditcard.com is not worried about disheartened consumers straying for fear they will have to pay for even the smallest service.
"If the content is of value, people will be willing to pay for it, rather than not getting it at all," Mr. Penn said. The company is not wasting time targeting individual on-line merchants.
Microcreditcard.com hopes to collect hundreds of on-line merchants in one swoop by targeting Internet service providers (ISP) such as American Online Inc. or application service providers (ASP) such as Qwest Communications Inc. Thousands of companies could automatically have the software installed once an ISP or ASP becomes a client.
Using the software, ISPs and ASPs will be able to measure the success of their on-line merchants in dollars rather than the number of hits a site gets. The ISPs and ASPs receive about 5 percent of each transaction. The company is testing the software for five clients, which the company would not name.
Mr. Kayatin explained that it only benefits the on-line merchants tremendously by bringing in additional revenue for a small fee to Microcreditcard.com.
The software is basically free to merchants, but Microcreditcard.com makes money by taking 8 cents and 8 percent of each of the merchant's transaction.
The other revenue stream is from advertising.
Without the software, it does not benefit merchants much to charge an on-line shopper 10 cents to browse a catalog or watch a mini-presentation on line, Mr. Kayatin said.
Credit card companies would not accept such a minimal transaction. But, if the transactions are grouped, 10 cents per transactions could mean thousands a company could gain in revenues, he said.
If you're a regular Internet merchant, that's 30 percent plus 3* percent to process 25 cents, Mr. Kayatin said.
"Credit cards can process $8, but it's not profitable," Mr. Penn added.

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