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This assessment of the future of Internet payments concentrates on the potential of server-based Internet payment systems. The central server-based approach is seen as a relevant future trend and "paradigm shift" in the development of Internet Payment systems, and the analysis therefore goes beyond the mere observation of a "second generation" of Internet payment systems (such as prepaid scratchcards, "private currencies", P2P systems, and 3D-SET).

The assessment is problem-oriented. To analyse the Internet payment problem and to understand the medium term development of Internet payment systems, the Internet payment problem is defined and its main parameters are distinguished. These parameters or criteria constitute the tool to later assess the advancements and drawbacks of server-based Internet payment systems. To better understand the recent trend towards server-based payment systems, an evolutionary approach to the development of Internet payment system is also taken.

The analysis reveals the remarkable potential of server-based payment services. From the customers' and merchants' point of view, the new approach is an important step forward with respect to ease of use, minimising the requirements for local software. It can also be seen as a major step towards a common user experience. Server-based payment services have the potential to integrate different payment systems and to provide further added value services, e.g. EBPP. The server-based approach has also strengths when it comes to payments without bank account, P2P payments, micro-payments, anonymous payments, and it is a must for mobile phone payments.

Background Paper No. 3.
Electronic Payment Systems Observatory vatory

Additional information

Authors: BÖHLE K, JRC Institute for Prospective Technological Studies, Seville (ES)
Bibliographic Reference: EUR 19935 EN (2001), pp. 26. Euro: Free of charge
Availability: Available from European Commission, JRC Knowledge Management Unit, Ispra (IT) Tel: +39 033278 9843 or +39 033278 9864 Fax: +39 033278 9623 E-mail:
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