Today, hardly anyone knows what to make of the term CyberCash. It is an online payment model from the 1990s. A central server took over the intermediary functions between bank, merchant and customer. However, the payment variant, in which the customer paid with virtual money, did not catch on. Due to a lack of acceptance, the service, which was initially seen as promising, was withdrawn from the market as early as 2001.
How CyberCash works
The CyberCash payment model works by combining three components. First, there was the “CyberCash Gateway Server,” which acted as an intermediary node between the banking systems on the one hand and customers and merchants on the other. The server was also the central certification authority. There was also the CyberWallet as the customer’s virtual wallet, in which the customer’s means of payment were managed, and CyberRegister, the merchant’s online cash register. Here, the administration is controlled on the merchant’s side. A purchase was triggered via the merchant’s website, i.e. via their online store, the details from the store were transferred to the CyberCash Wallet software and processed there. The transaction was confirmed by the customer’s credit card. The merchant, in turn, confirmed the sale with the server, which checked all the details and then triggered a payment authorization. At the same time, the banking system was informed and the transaction was settled. There were three payment options in total: CyberCoin micro payment system, direct debit and credit card payment.
Requirements for CyberCash transactions
In order for a payment to be triggered by CyberCash, various groups had to work together. These were, on the one hand, CyberCash with the corresponding licensing rights and the mandate to control the gateway between bank, payer and payee. Banks and credit institutions had to offer the CyberCash payment system themselves. Finally, the online merchants had to conclude corresponding license agreements with the financial institutions so that the payment system could be made available to customers. Customers, in turn, first had to install the corresponding software on their home computers before they could use CyberCash. In retrospect, this is also blamed for the failure of the system. Many customers found this too time-consuming, and there were also technical problems with the installation.
The development of CyberCash
CyberCash was developed in America, in the US state of Virginia. The American company CyberCash Inc. developed the system, and CyberCash was founded in Frankfurt by the American parent company, Commerzbank, Dresdner Bank and Sparkasse Koln, among others. The system was used in Germany from 1997 and finally discontinued in 2001.
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