The growth of electronic commerce is dependent upon the emergence of effective electronic payment systems. Whilst payments for large purchases can be made relatively easily using credit/debit cards, small-scale electronic commerce is constrained by the limited nature of existing e-cash (or ‘micropayments’) systems. This paper outlines the evolution of electronic payment systems, leading to an analysis of the essential characteristics of e-cash, and microeconomic / macroeconomic implications of the development of e-cash. Finally, the key characteristics of successful electronic payment innovations are analysed using binary dependent variable estimation techniques on data derived from the Electronic Payments Systems Observatory (ePSO) database.