Electronic currency

what is bitpass???

bitPass is a micro payment service that facilitates online content access transactions by integrating the processes involved in buying and selling content, and making it practical to charge very small amounts of money.

In the BitPass system, transaction fees are paid by the content provider. For payments under $5., the charge is 15% of the cost. Micro payments are by definition very small sums, so the fee is usually just a few cents. For the content buyer, the BitPass system works similarly to a pre-paid telephone card: you sign up for the service and put money into your account using a credit card or pay pal , which gives you credit towards the purchase of content. When the user agrees to pay the cost of access, their account is charged automatically rather than through a link to an external Web site for payment.

Although the micro payment concept has been proposed for several years, it's been a hard sell. After all, most online content has always been free, and people are naturally opposed to paying for anything they might reasonably expect to get for nothing. However, at least part of the reason that content has been free is likely that no one's found a viable way to get people to pay for it to this point.

Misunderstanding electronic payments

Swinging Wide

BitPass will fail, as FirstVirtual, Cybercoin, Millicent, Digicash, Internet Dollar, Pay2See, and many others have in the decade since Digital silk road, the paper that helped launch interest in micro payments. These systems didn't fail because of poor implementation; they failed because the trend towards freely offered content is an epochal change, to which micro payments are a pointless response.

BitPass' predecessors failed for a variety of reasons and of course "poor implementation" was among them. Efforts like the ones Shirky mentions were plagued with problems: Elaborate and intrusive sign-up forms, flaky business models, mandatory plug-ins, blood-sucking hook-ups to bank accounts, vendor start-up fees, greedy profit splits, etc. Some even claimed to offer "micro payments" while refusing to support transactions below 99¢.

bitpass died???

Bitpass, the Menlo Park start-up that gave people a way to make micro payments online, has died.

Bitpass sent out an email this afternoon to users saying it was closing Jan 26 2007. Online payments have become more competitive over recent months, since Google joined the fray with Google Checkout, and began offering its service for free.

Perhaps Google’s homepage promotion of Checkout was the last straw — making Bitpass the latest Google road-kill. Just three months ago, Bitpass’ chief executive said he was hoping to ally with google, to have Bitpass’ micro payment feature integrated into Google Checkout.

Bitpass was already showing odd signs two years ago, when the CEO disappeared and nobody ever responded to our request for information about what happened. And numerous other micropayments companies struggle or went belly up, including First Virtual, Cybercoin, Millicent, Digicash and Internet Dollar and Peppercoin is still standing.

See our recent coverage of BitPass here . BitPass has taken two rounds of funding, the latest in the fall of 2004, when it raised $11.75 million from Worldview Technology Partners, Steamboat Ventures (the venture capital arm of the Walt Disney Co.), RRE Ventures and others. Prior to that, it had raised $1.5 million from Garage Technology Ventures, Cardinal Venture Capital, Amicus Capital and Constantine Partners.