Smart Codes: Advantages Over Other Onlne Payment Systems

by John S. James www.MicropaymentSmartCodes.com 2004-12-07

Here are a dozen advantages of smart codes over other payment systems. There are many more. (For a summary of what smart codes are, see www.MicropaymentSmartCodes.com.)

• Instant Startup: Anyone could get a smart code and use it immediately for purchases or other purposes, with no need to open an account or give personal information. They could use the code to buy or donate cleanly in seconds, with no chance of unwanted email later, and no need to set up and remember a password either for the code itself, or for Web sites where they use the code to make payments.

• Paid Music Downloads Free: Someone who likes a song, article, photo, or other digital art could buy any number of downloads, often at a discount, receiving a link with a smart code in it that anyone, anywhere could use to get paid access free. The buyer could email or otherwise distribute the link to whomever he or she wants (the smart code is restricted and could only be used to download the particular art purchased). When the link is empty, anyone could recharge it for the world by purchasing more downloads (or buy a new link and send it out). And before the link is empty, anyone could click on a green circle (or other standard symbol) to reach a page that will let them buy more downloads for the world, either while the song is playing or afterwards. Here is a way to address the music-download problem, by marketing songs and other art mainly to fans, friends, communities, and other modern-day patrons of the arts, instead of expecting each listener to pay individually. Listeners can download for free while the artist still gets paid.

• Donations That Live Forever: A specific donation to a historically important cause could be displayed forever by one or more public codes, under control of the donor who keeps the secret parent code. These donations could develop investment value that could be much greater than the donated amount, creating a new incentive to contribute to the most important causes.

• Automatic Royalty, Donation, and Tax Payments: A publisher's smart code could pay its artists' royalties instantly, as part of the processing of each sale, avoiding the wait for quarterly payments (and allowing artists to purchase their own work to make sure royalties are being paid correctly). Smart codes could pay sales or other taxes instantly as well. Also, both buyers and sellers could specify the donation of a portion of the transaction amount to their chosen organizations -- with donation policies, percentages, or performance showing up on the organizations' Web sites or their own, if they wish. Multiple royalty, tax, and/or contribution payments could be generated by each sales transaction. Smart codes record all transactions they are involved in, and their owner could get accounting reports at any time, though the code's control center, reachable by entering the code itself into a Web site run by the code server.

• Robot Negotiation: Smart codes could negotiate on behalf of their owner, even making small purchases automatically with no human notice or intervention, under rules or programs selected by their owner.

• Restricted Codes: Smart codes could easily be restricted to one payee or a list of payees. The list of allowed companies, organizations, Web sites, catalogs, etc. could either be static (set permanently when the code was created) or dynamic (one or more payee lists on the Web that could be updated at any time) -- a choice inherited from ancestor codes but usually changeable by the owner. This one mechanism supports parental controls, digital gift recommendations, codes restricted to business purposes, and paperless digital admission to movies, plays, or other events.

• Instant (and Other) Cancellation: A smart code that is compromised could be cancelled with a phone call; the owner need only enter the code itself, and all remaining value will be returned automatically to its parent. Alternatively, the code's owner could rename the compromised code (either online or with an automated phone call), making the old one worthless. And a lost code could have its value retrieved by its parent code, which could be kept in a safe place. Also, codes could be set to expire if not used (for example, codes given to library patrons for proprietary online access), with all remaining value automatically returning to the parent at the expiration date.

• Flexible Security: Smart-code users could trade security vs. convenience according to the needs of the situation. High-value codes could have trillion-to-one or more odds against guessing, and never be seen by any third party besides the owner and the server, which communicate securely to generate children codes with less value. On the other hand, low value, amount-of-purchase, or restricted codes could often be sent without encryption, as usually there is no feasible way to steal them. How would one harvest and sell codes worth, say, ten dollars, and restricted perhaps to certain scientific journals or admission to a certain showing of a movie? The thief would have no way to find out what the restrictions were, because they would have been set by an unknown ancestor code. And if somehow the code could be used, it would record all transactions.

• No Pfishing: Smart codes do not need personal information (except for convenience, such as a shipping address for automatic entry into Web sites if needed -- there is no billing address since payment is immediate, so there is no billing). Therefore the pfishing scam cannot steal personal financial information. Many other scams are possible, including fraudulent links to sites that imitate trusted merchants. But buyers cannot lose more than the total value of the code they use, which they could control.

• Easy Merchant Setup: Any smart-code owner could create "public codes" -- children codes that could be given out and receive payment for their parent, which remains secret. These payments could be made not only by smart code, but also by credit card or other payment means offered by the code provider (the "code server," the organization that provides the codes), and chosen by the smart-code owner. This owner may need permission from the code provider (or from ancestor codes) to receive money, but all the technical setup will already be in place. Any number of public codes could be created any time for different marketing or fundraising advertisements or campaigns. And each public code also provides its own Web site. This site could be left at its default, customized individually, or customized collectively (one edit applies to all of the current or future sibling public codes).

• Compatibility: All smart codes could be compatible with each other, even if the code formats and the servers that process the codes were designed with no technical standards in common. This is possible through retrofitted communication protocol(s) that send a buyer's smart code, amount to be charged, and payee to the buyer's server, and returns the approval or denial.

• Cost: We guesstimate a processing cost of less than a tenth of a cent per smart-code financial transaction regardless of amount, at least when only one server is involved -- and probably about a tenth of a cent if the buyer and seller have codes on different servers. We computed this figure by rough calculation from commercial Web-hosting fees, and associated bandwidth and storage limits. While additional security will be needed, it will not add to the unit cost of most transactions.

This system could not have existed until recently, after the Web came into widespread use. And money seldom brings forth innovation for the general good, but rather conflict and rigidity. I discovered the smart-code idea by accident, while working on the problem of selling newsletter subscriptions in a world increasing either rich or poor -- and then developed the design as a work of art, not a business. This history would not have happened in the corporate world. So the idea could be new.

If you believe that anything on this site could not work as stated, let me know why not. See contact information on the home page, www.MicropaymentSmartCodes.com

This work is licensed under a Creative Commons License.