Future Bright For Digital Cash.

The future looks good for online digital cash transactions, a report released today says, but it warns that a shakeout is on the horizon for companies that develop and deliver virtual money technologies. In its report, "The Dash to Digital Cash," the Aberdeen Group says the drive to support micropayments - typically sub-$10 transactions without the disproportionate processing fees of an ordinary credit card - is expected to gain significant momentum over the next two years or three years. "Although the Web is able to distribute very granular content and services, until now the costs of processing small financial transactions has effectively blocked the emergence of low cost, pay-as-you-go content models that require low-value transactions," said Judith Rosall, an Aberdeen research director and the author of the report. "Our research indicates that digital cash technologies - which enable easy and inexpensive-to-process micropayments - are reaching a stage of maturity where they will significantly impact the pricing and content models offered over the Web," she said. "We believe that digital cash technologies will begin growing in adoption and acceptance in (the) year 2000 and will contribute to significant worldwide e-commerce market growth, particularly in the sales of digital content, digital music, and online gaming." The Aberdeen report looked at a number of approaches to digital cash, including credit card aggregation (often through "electronic wallet" technologies), stored-value smart cards, and billing through Internet service providers (ISPs) or telecommunication companies. Sizing up the players in the market, the report says that, as the digital cash business heats up, the providers likely to survive may be the ones whose own wallets are the fattest. It predicts a marketing war as providers jockey to become the recognized brands.