NYU AND THE WORLD-WIDE WEB

Paying the Piper on the Web: Is NetBill the Answer?

by David Frederickson

[Ed: Links to web pages and/or e-mail addresses which have become inactive since the publication of this article have been enclosed in curly brackets { }. Replacement links have been provided where possible.]

How will we pay for the many small items of proprietary data that someday we'll be downloading from the Internet? In a December NYU colloquium, Professor Marvin Sirbu outlined a protocol that he and others at Carnegie Mellon University have been developing. Their NetBill protocol may be the way you'll make your purchases. (For more about the ACF's colloquia on computers and communications, see Diverse Languages on the Web in this issue.)

One of the grander promises of the Web is of the new dawn of online shopping. Though the prospect of an online mall may appall you, there are nonetheless likely to be times when you would like to make a financial transaction online -- to buy a book, to pay for a subscription, to order a journal reprint, to download a copyright image. And even if you avoid the more commercial lanes of the information highway, the age of shrinking subsidies is going to mean that you'll have to pay for more and more of what you need to get. As Professor Sirbu noted, the charges are likely to be numerous and tiny.

Obviously you could pay with a credit card; without a second thought, many of us order things over the phone and arrange for payment through a credit account. The system works; those who profit by it make sure it works well. There are abuses, but a fairly moderate level of consumer prudence seems to suffice.

Completing a similar transaction on the Internet, however, brings up new issues: things have been much more freewheeling on the Internet than on the telephone lines; it seems easier for a message to be intercepted; we've read about hackers breaking into computer systems over the network; and therefore it may seem less than prudent to type one's credit-card number into a computer for transmission over the network. The problems are not insurmountable, though, any more than the problems of a telephone-based transaction are. Visa and MasterCard have recently announced agreement on standards for online transactions. We'll soon see how well the standards work.

Professor Sirbu pointed out another aspect to the problem, though: credit-card transactions are moderately expensive (something like fifteen cents per transaction), and someone has to pay them -- usually the vendor, as part of the percentage charged by the card company. But if the promise of the Web is to be fulfilled, there will have to be many small transactions, each too small (pennies to a few dollars apiece) to merit trotting out the credit card.

Here's where NetBill can be useful. The NetBill protocol, developed at Carnegie Mellon University, will let you identify a product you want to buy (say an article) and ask the vendor for a price quote. The vendor then can check your status and give you a quote -- list, discount, free (if you're a subscriber), premium (during a time of heavy traffic), or whatever. (All the relevant messages are encrypted and secure. In all but one of these exchanges, you are talking directly to the vendor -- or rather, your respective communications programs are talking, using the NetBill protocols and libraries.) If you accept the quote, the vendor sends the article to you, in encrypted form, and sends the bill to the NetBill server, where the credit is transferred from your account to the vendor's (the only time the server is involved), and the key to decrypt the article is sent to you. Both you and the vendor will maintain accounts with the NetBill server. It will debit you for your small purchases until it needs to replenish your account with another $50 or $100, through your bank, credit card, or whatever other means you've agreed on. Similarly, it will accumulate credits until the sum is large enough to send to the vendor's bank.

That, of course, is only a sketch of the plan. You can find out more about NetBill on the Web at {http://www.ini.cmu.edu/NETBILL/}.

Posted 21 February 1996. Last reviewed 2 December 2005.