Evaluating and Selecting Digital Payment Mechanisms

Jeffrey K. MacKie-Mason
Kimberly White

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 characterize the properties of 10
highly visible mechanisms according to 30 criteria. We show how a
decisionmaker might follow a systematic rational choice approach to
select or evaluate a mechanism The 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. The
evaluation approach guides payment mechanism designers and researchers
by the needs of users who desire particular bundles of
characteristics.We then apply the analysis to the University of Michigan
Digital Library (UMDL), a large-scale intelligent-agent commerce-based
system. We show how the user-centric approach may lead to the use of
more than one payment mechanism within a commerce system, and how the
evaluation criteria could be used to determine mechanisms for different
UMDL needs.