InternetCash.com

» see internetcash.com as it lived, on the wayback machine

~ the goodbye ~

i missed internetcash. wrong region and wrong age. i was sixteen in 1999 on a 33.6k modem in ankara, the us prepaid e-cash card you scratched off in a 7-eleven was not on a rack i would walk past. by the time the bust took the company down in august 2001 i was on a 56k upgrade and the broader online-shopping category had still not arrived for me in any practical sense.

the company started in april 1999 in new york. charles doherty led the founding team alongside yiannis tsiounis, jason richelson, and ben reddy. tsiounis came out of new york university's cryptography group and ran the security side. an earlier brand name on the project was spendcash.com. the team raised over $10 million between may and december 1999, mostly from jim bidzos and elDorado ventures.

the product worked the way a phone card worked. you bought a physical card at a participating retailer with the pin scratched off, then at checkout you got redirected to an internetcash payment window where you entered the long number plus the pin. the merchant never saw your credit card because you never gave one. for households without a card, or households not willing to type one into a 1999 web form, the pitch landed cleanly on paper.

~ the chronicle ~

~ the minting ceremony ~

the engineering write-up of the minting process was the part of internetcash that survived the company. the system did not lean on the existing card networks at all. it generated its own card numbers using hardware encryption devices from ncipher with a secret-sharing scheme on top. a quorum of authorized company officers had to be physically present when a new batch of cards got minted. the brand never recovered from the bust but the threshold-crypto operations procedure read like a bank-grade ceremony.

the catch was that the people building the security ceremony and the people building the merchant integrations were solving different problems. by 2000-2001 the major credit-card processors had pushed their per-transaction floor low enough, and their 3-d secure ish fraud rules sticky enough, that the practical reason to issue a parallel prepaid currency stopped existing for most consumer purchases under $50.

~ the actual end ~

todd kahn joined as president and coo in april 2000, around the time the public markets stopped funding e-payment startups without a clear merchant volume path. the year that followed was the part of the bust where private-round bridge financing dried up across the whole consumer-internet sheet. internetcash hit the wall in august 2001. no acquirer stepped in to keep the brand on shelves.

the founders kept moving. yiannis tsiounis later turned up in further payments work, and one of the company's alumni hans thomas eventually started 10x capital. the secret-sharing ceremony lived on in textbooks. the prepaid-cards-at-7-eleven idea came back later through paypal's reload network and visa gift cards, both running on the rails internetcash had tried to bypass.

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