First Virtual Holdings was a company formed in early 1994 to facilitate Internet commerce

Electronic commerce

Electronic commerce, commonly known as e-commerce, eCommerce or e-comm, refers to the buying and selling of products or services over electronic systems such as the Internet and other computer networks. However, the term may refer to more than just buying and selling products online...

. The first product offering from First Virtual was an Internet payment system, which was developed quietly and publicly announced as a fully operational open Internet service on October 15, 1994.

First Virtual provided most of the features of both eBay

EBay

eBay Inc. is an American internet consumer-to-consumer corporation that manages eBay.com, an online auction and shopping website in which people and businesses buy and sell a broad variety of goods and services worldwide...

 and PayPal

PayPal

PayPal is an American-based global e-commerce business allowing payments and money transfers to be made through the Internet. Online money transfers serve as electronic alternatives to paying with traditional paper methods, such as checks and money orders....

 before those companies existed.

Founding

Key people behind First Virtual were Nathaniel Borenstein

Nathaniel Borenstein

Nathaniel S. Borenstein is an American computer scientist.He is one of the original designers of the MIME protocol for formatting multimedia Internet electronic mail.-Biography:...

, Marshall Rose

Marshall Rose

Marshall T. Rose is a network protocol and software engineer, author and speaker who has contributed to the Internet Engineering Task Force , the Internet, and Internet and network applications. More specifically, he has specialized in:...

, Einar Stefferud

Einar Stefferud

Einar A. Stefferud was an Internet pioneer, computer researcher and entrepreneur, who made many significant contributions to the development of the Internet, particularly in the areas of IETF RFCs and standards, secure online payment systems, DNS, and secure email...

, and Lee Stein. From The New York Times

The New York Times

The New York Times is an American daily newspaper founded and continuously published in New York City since 1851. The New York Times has won 106 Pulitzer Prizes, the most of any news organization...

:

"The First Virtual approach is to create an automatic authorization system that requires no previous relationship between buyer and seller. In the era of electronic commerce, the new system may herald a shift comparable to the transition a generation ago, when the members-only department store credit card gave way to use-anywhere cards like Visa and Mastercard

MasterCard

Mastercard Incorporated or MasterCard Worldwide is an American multinational financial services corporation with its headquarters in the MasterCard International Global Headquarters, Purchase, Harrison, New York, United States...

.

"The new company, based in San Diego

San Diego, California

San Diego is the eighth-largest city in the United States and second-largest city in California. The city is located on the coast of the Pacific Ocean in Southern California, immediately adjacent to the Mexican border. The birthplace of California, San Diego is known for its mild year-round...

, is the brainchild of Lee Stein, a San Diego lawyer and accountant who is its president, and three computer scientists long involved with the Internet global web of computer networks. First Virtual's big partners are Electronic Data Systems

Electronic Data Systems

HP Enterprise Services is the global business and technology services division of Hewlett Packard's HP Enterprise Business strategic business unit. It was formed by the combination of HP's legacy services consulting and outsourcing business and the integration of acquired Electronic Data Systems,...

 Inc., a division of General Motors

General Motors

General Motors Company , commonly known as GM, formerly incorporated as General Motors Corporation, is an American multinational automotive corporation headquartered in Detroit, Michigan and the world's second-largest automaker in 2010...

, and First USA, a fast-growing credit card company in Dallas

Dallas, Texas

Dallas is the third-largest city in Texas and the ninth-largest in the United States. The Dallas-Fort Worth Metroplex is the largest metropolitan area in the South and fourth-largest metropolitan area in the United States...

 that will issue a Visa card for the new service."

Breakthrough usage of technology

First Virtual's system differed in many ways from all other proposed approaches to Internet commerce, most notably in the fact that it did not rely on encryption

Encryption

In cryptography, encryption is the process of transforming information using an algorithm to make it unreadable to anyone except those possessing special knowledge, usually referred to as a key. The result of the process is encrypted information...

 or any other form of cryptography to ensure the safety of its commercial transactions. Instead, safety was ensured by enforcing a dichotomy between non-sensitive information (which may travel over the Internet) and sensitive information (which never does), and by a buyer feedback mechanism.

First Virtual's protocols were built atop existing IETF protocols, and subject to public discussions. The backbone of the system was designed around Internet email

Email

Electronic mail, commonly known as email or e-mail, is a method of exchanging digital messages from an author to one or more recipients. Modern email operates across the Internet or other computer networks. Some early email systems required that the author and the recipient both be online at the...

 and the MIME

MIME

Multipurpose Internet Mail Extensions is an Internet standard that extends the format of email to support:* Text in character sets other than ASCII* Non-text attachments* Message bodies with multiple parts...

 (Multipurpose Internet Mail Extensions) standard. First Virtual used regular email to communicate with a buyer to confirm charges against their account. Sellers could use either email, Telnet

TELNET

Telnet is a network protocol used on the Internet or local area networks to provide a bidirectional interactive text-oriented communications facility using a virtual terminal connection...

, or automated programs that made use of First Virtual's Simple MIME Exchange Protocol (SMXP) to verify accounts and initiate payment transactions.

Initial venture capital

Early rounds of investment came from leading institutions such as First Data

First Data

First Data Corporation is an American payment processing company headquartered in Atlanta, Georgia. First Data is a provider of electronic commerce and payment solutions...

, First USA, and GE Capital

GE Capital

GE Capital is the financial services unit of General Electric, one of five major units. Its various divisions include GE Capital Aviation Services, GE Capital Real Estate, GE Energy Financial Services and GE Money....

, leading to a successful IPO in 1996. First Virtual was sold and changed its name to MessageMedia (for $0.60 per share) on December 16, 1998.

Bought out by DoubleClick

MessageMedia used the FV Email tools with considerable success in its Customer Relations Management Services (CRM) until MessageMedia in turn was forced to sell out to DoubleClick

DoubleClick

DoubleClick is a subsidiary of Google that develops and provides Internet ad serving services. Its clients include agencies, marketers and publishers who serve customers like Microsoft, General Motors, Coca-Cola, Motorola, L'Oréal, Palm, Inc., Apple Inc., Visa USA, Nike, Carlsberg among others...

in the dot com crash for US$0.16/share in late 2001.