Evaluating and Selecting Digital Payment Mechanisms

Abstract

The Internet is growing rapidly as a marketplace for the exchange of both tangible and information goods and services. Numerous payment mechanisms suitable for use in this marketplace are in various stages of development. Because their development is so recent, it is difficult for potential participants in electronic commerce to evaluate and select payment mechanisms. We propose a systematic method for evaluating and selecting payment mechanisms. Our selection process typically leads to a solution in a few iterations or less; it is generalizable; and it requires relatively little information about each alternative, reducing the cost of evaluating and selecting payment mechanisms. Researchers and payment mechanism designers are guided on further development by the needs of users who desire particular bundles of characteristics. As a by-product of our analysis, we present a detailed matrix characterizing 10 leading payment systems according to 30 criteria.