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. Last Updated: 07/27/2016

Making Money on E-Mail

For many companies providing electronic mail (e-mail) in Moscow, the single most awkward problem is collecting money from customers.

To use electronic mail you dial a host computer, give a password and start using the service. In a country where electronic banking exists, payments are easy. You set up a regular payment order at a bank or agree to have money automatically deducted from your credit card.

In Russia not only is the banking system too slow and underdeveloped for this, but many people also prefer to minimize the amount of business they do through banks. Making this more complicated, e-mail service providers must keep re-writing their ruble tariff lists in order to keep pace with inflation and the rising cost of inter-city and international telecommunications.

At the moment, most Russian e-mail service providers ask users to pay in advance. When an account balance becomes low they issue automatic warnings; when it goes into the red it is frozen until the debt is paid. Chasing customers for debts is too difficult and time-consuming even to think about.

The big hassle for customers is that it is uneconomical to pay a large amount in rubles in advance, since the real value of their deposit erodes the longer it goes unspent. Therefore they must make regular visits to their e-mail service provider in order to keep their balances topped up.

At the Moscow-based e-mail company Glasnet, this concept has been developed into an elaborate form of user credits. To keep its prices current, Glasnet's tariffs are not in rubles but in units called ICS. The Glasnet tariff list remains stable but the value of the ICS is periodically adjusted against the ruble to keep pace with inflation. Customers purchase however many ICS they want in the knowledge that they will not, like the ruble, devalue over time. The initiative is then with them to keep an eye on their account balances and make sure they do not run up ICS debts.

The thought that has gone into designing this payment system does not have purely Russian applications. The Internet -- a mega-network accessible virtually free of charge by millions of people the world over -- would be an ideal place to sell goods or services. Since reaching potential customers is so simple, it has possibilities of becoming a place where all kinds of cottage industries could offer their wares. Authors could sell software, games, newspapers and a million and one other things. The problem is that no one has yet satisfactorily cracked the problem of efficiently collecting customers' money.

Right now, the most common method is the credit card -- by filling in a form, or sending off an electronic mail message with your card number, expiration date and billing address. However, many people are justifiably wary about sending their financial details across the world's least secure network. Credit cards are also an expensive and unwieldy way to cope with the hundreds of thousands of tiny, sub-dollar transactions that could form the basis of this electronic economic community. From the point of view of the customers, few people will be really interested in going through that kind of complex payment process just to access an electronic newspaper that could cost only 20 cents.

According to Anatoly Voronov, the general director of Glasnet, the ICS model could be a partial answer to this problem. Using the electronic newspaper example, he said a solution would be to publish a detailed index on the Internet and give interested customers a small number of credits (like the ICS). They could then use these to select what they wanted to be sent from the index. If sufficiently impressed, they would then buy more credits to be able to obtain other interesting bits and pieces in the future whenever they needed them.

In this way customers could quickly get access to articles as they appear and not have to worry about payment every time. The size of the transaction would be completely up to the customer and so no one need worry about losing a fortune on buying a product they did not really want.

Robert Farish is the editor of Computer Business Russia. Tel: 198-6207, Internet e-mail: