There are competing technologies and companies that are trying to dominate this category of cash-like transactions, however, Cha!’s authentication protocol is patented. Their closest competitor is Qpass trans-action network http://www.qpass.com/ that is also targeting digital content purchases under $20. Qpass was started by a former Microsoft programmer and is based in Seattle.

Not unlike Cha!, Qpass allows the consumer to buy content on a pay-per-view or day pass basis on Qpass enabled sites. To earn revenue, they take a percentage of the transaction, up to 30-40% in addition to an upfront fee to merchants to install their software on the merchant’s server, rumored to be $50,000. This compared to Cha!’s flat percentage of any transaction ranging between 8-12%.

Other competitors exist but do not compete directly for the small transaction content market. That said, Cybercash and First USA have teamed to create a one-click buy technology that is accessible through a network of InstaBuy enabled sites. http://www.instabuy.com/check_it_out.html Consumers can sign-up for a free and protected wallet and have access to purchases of both physical and digital products through the partner sites.

Microsoft’s much talked about ‘Passport’ technology may also prove to be a competitive threat in the future. http://www.passport.com/ The wallet will store all transaction related information in addition to keeping personal information on consumer preferences and even hobbies. Purchases can be made for a range of items typically charged to credit cards such as gifts, software and hardware. Hereagain they are not attempting to capture the digital content market like Cha! and Qpass. The biggest obstacle for Passport is the complexity to the consumer of setting it up, however, Microsoft is attempting to make the Passport easily available at merchants’ sites by making simple protocols available to accept Passports.

There is debate as to the utility and long-term viability of micropayments over the internet. Especially because we have seen so many players in this space fail. CyberCash’s CyberCoin product has fallen by the wayside and Compaq inherited a ‘MilliCent’ product through their purchase of DEC but that product has not yet been launched. Cha! believes these failures were due to the overdesign of the product and like Microsoft’s Passport, the complexity in enrolling. Often with these products, the consumer is asked to load ‘digital money’ onto their PC’s rather than making the transaction comprehensible with real credit card based charges. Other micropayment technologies had attempted to circumvent the use of credit cards altogether when in fact, small amount content purchases are perfectly suited to ecommerce transactions. A chart of some of the above competitors as well as other micropayment players is attached.

Cha! Estimates that more than 12% of commerce transactions are $20 and less and none of this is taking place over the internet. Currently we are only seeing macro-level purchases but micro-payment technologies offered by Cha! and Qpass are attempting to change that.