Micro payments - the future of eccomerce?

[movietub]

Just wondered what people on here thought of the impending micro-payments generation of websites?

For those that arn't aware micro-payments are what they say, its the ability to process tiny cc payments without losing the entire value of the transaction to the processing fees.

A typical example is charging someone 20p to view some content, with paypal and others charging 20p per transaction its a little pointless.

Several website offer monthly membership charges to view a variety of content, with micro payments rather than, say, access 300 videos for £30 pm you could watch just the ones you want and pay 50p etc each time.

Naturally for these reasons the 1st adopters are likely to be providers of 'adult entertainment media' and it is equally likely that the first company that makes micro payments a reality will be in favour of adult content, if not fully focussed on it.

My question is other than cheap convenient porn :redface: what opportunities this would open up to the rest of us?

I heard that Google were looking into it along with an extention of the Google Checkout service - Hurry up Google...

[streetslocal]

Just wondered what people on here thought of the impending micro-payments generation of websites?

For those that arn't aware micro-payments are what they say, its the ability to process tiny cc payments without losing the entire value of the transaction to the processing fees.

A typical example is charging someone 20p to view some content, with paypal and others charging 20p per transaction its a little pointless.

Several website offer monthly membership charges to view a variety of content, with micro payments rather than, say, access 300 videos for £30 pm you could watch just the ones you want and pay 50p etc each time.

Naturally for these reasons the 1st adopters are likely to be providers of 'adult entertainment media' and it is equally likely that the first company that makes micro payments a reality will be in favour of adult content, if not fully focussed on it.

My question is other than cheap convenient porn :redface: what opportunities this would open up to the rest of us?

I heard that Google were looking into it along with an extention of the Google Checkout service - Hurry up Google...

This is a really old system.
I implemented this system 5 years ago through another of our businesses.
We use a system called glpayment

http://www.glpayment.co.uk/

[movietub]

Thats not really the same thing, what is the minimum you can actually charge via phone/sms and what is the take?

Micropayments that I was referring to will allow peple to go all the way down to about 20p, with a processing rate of a few percent. In my experience SMS/premium rate is more like 20-40% dependant on value.

The general census is that with these payment methods its still too difficult to sell things for a small enough amount to get a high impulse conversion rate and still make any money. even ringtones are £1.50 each, if they were 25p each kids would go mad and probably spend more.

[kabby911]

how to these micro payments work. if you sell something for 50p how much are fees going to be? I dont see this being cost effective for merchants unless there is a very high volume of sales. does anyone have anymore info on this?

[movietub]

No information exists because no one has annonced firm plans to do this yet. The problem is that credit cards re used more than hard cash these days, obviously more so online than the high street. But unlike cash its pointless selling anything for less than £1 taking into account the fees.

So in short a load of very cheap products and services would become immediatly available.

[stugster]

Access to public toilets? :) That was probably the first true Pay as you Go service.

[IridiumCorp]

Micro Payments have been around for years. There are a number of ways to implement a successful micro payment system. Most are geared towards content download either over the net or some other mobile device. Any micro payment under a certain threshold will be tied to a credit/debit card via either pre-pay or top-up type e-wallet and or phone bill.

There is also a mechanism called closed loop acquisition also known as "On Us" where a branded card that carries a companies logo but also either a visa or mastercard logo. The transactions on these cards through registered merchants on the brand do not actually hit the VISA/MC interchange so the card issuer does not absorb fees as both the issuing and acquiring are done through one point. These types of setups allow for very low micro payments but most card companies shy away from this type of service as it can be very high volumes for very low return.

[movietub]

Micro Payments have been around for years. There are a number of ways to implement a successful micro payment system. Most are geared towards content download either over the net or some other mobile device. Any micro payment under a certain threshold will be tied to a credit/debit card via either pre-pay or top-up type e-wallet and or phone bill.

There is also a mechanism called closed loop acquisition also known as "On Us" where a branded card that carries a companies logo but also either a visa or mastercard logo. The transactions on these cards through registered merchants on the brand do not actually hit the VISA/MC interchange so the card issuer does not absorb fees as both the issuing and acquiring are done through one point. These types of setups allow for very low micro payments but most card companies shy away from this type of service as it can be very high volumes for very low return.

Interesting but still not micro-payments as I understand the theory.

Forget using pre-pay or e-wallet/accounts.

Lets say some one writes and sells document templates, they sell membership to their site then you download as many as you require. Except you don't because you only want one, you believe you will only ever need the one.

But how much is one worth? Could sell a lot with a decent page rank if they were only 50p each. Could possibly market this through Adwords as well but the cpc would devour all profits on top of, for example. paypals 20p.

The ultimate form of online micro payments is the ability to buy online for 20p, 50p whatever, without registering for anything - in the same way you can buy a pack of chewing gum for 18p in the supermarket on your credit card - and the seller retains enough of the value of the transaction to make it worthwhile.

Just requires a card processing company setup to handle a huge quantity of tiny, low risk payments. Which currently there isnt.

[IridiumCorp]

Just requires a card processing company setup to handle a huge quantity of tiny, low risk payments. Which currently there isnt.

High investment and low return = not such a good thing :)

It has been a while since I followed the micro-payments issue. I re-read http://en.wikipedia.org/wiki/Micropayment which covers things far better than I could ever.

[movietub]

A very interesting read - also learned a new word 'microcommerce' ;)

also interesting to see the term originated to describe micro payments down to 1000/1 dollar - although its hard to see why this was ever of interest. A penny sweet is certainly the smallest purchase I am ever expecting to make.

oh well, guess that wraps up the thread! I'm sure its only a matter of time before someone offers such services.

[edmondscommerce]

will be interesting to see what other ideas crop up after the initial porn business models

[sandiep]

will be interesting to see what other ideas crop up after the initial porn business models


Viewing pages of websites ? :rolleyes:

[greenwood-IT]

Hiya,

We tried to find/implement micropayments back in 2000 for VoIP phone calls. At that time every VoIP company required pre-payment and therefore you had a quite high minimum purchase value (£10) which limited the take up. The theory was that if you could make it a pay-as-you-go service that you'd get more customers - but ultimately we had to give up with micropayments as nobody could process the small value transactions and our financial people preferred us to hold users call credit in our bank account. :)

The usual early adopters will be the porn industry closely followed by the data warehouse people like ancestry.com where they currently offer a yearly expensive membership or a cheaper 7 day pass - but still expensive if you only want to lookup one or two facts.

Chat soon.

[jolew]

Although there is an option of pre-payment on the Royal Mail website (for printing off postage), i think the smallest is £3.50, you can also 'pay-as-you-go', i.e. you can just pay per 'stamp' - 36p with your credit card.

[movietub]

They must be charging the price for the stamp + the transaction charges.

That's not a bad idea actually, I suppose you could allow someone to make a few 20p purchases (content to view etc) and then at the checkout stage add 20p cc processing? Even those who bought just one item probably wouldn't mind the extra 20p for the sake of finishing the purchase they started.

Psychologically customers will probably find the extra charge easy to stomach if its marked as credit card processing costs. If I was going to trial a micropayment service of my own I think I'd give that a go!

Either that or run it at zero profit to prove the theory whilst waiting for a suitable payment service to develop!

[edmondscommerce]

Viewing pages of websites ? :rolleyes:

well yeah...

but whats going to be on the webpage is the interesting thing...

its going to have to be something useful...

how about a really good dynamic xthml/css template generator that allows you to specify loads of parameters and then generates it all for you for 50p

I know there are some free ones out there, but I am thinking of something a bit better...

[movietub]

well yeah...

but whats going to be on the webpage is the interesting thing...

its going to have to be something useful...

how about a really good dynamic xthml/css template generator that allows you to specify loads of parameters and then generates it all for you for 50p

I know there are some free ones out there, but I am thinking of something a bit better...

HAHA - it is quite difficult to think of ideas that don't inlove nudity...

But thats a good one. I think this will be very muc the sort of thing to expect. That and all the cheap romanian porn flicks.

[sandiep]

The web, and the digital future is all about information. It therefore makes sense that micropayment are going to be used to acquire and subscribe to information. At the moment we have a mass of results returned for each google, i think that in by 2010 the amount of digital information is set to DOUBLE every 72 hours (microsoft's estimates, not wholly sure on the date).

This means that filtering the wheat from the chaff is going to be most important skill that any web user is going to need. Sites are going to have to earn that "reliable source" status, and then if they get that then that is an asset, and one which they will make revenues off. And that's where the micropayments are going to come in.

[edmondscommerce]

damn those eastern europeans and their internet entreprenurial genius

[movietub]

damn those eastern europeans and their internet entreprenurial genius

If could make money online by taking my knickers off I would :eek: But I'm warned NOBODY wants to see that so I'm doing it the old fashioned way.

[daz1034]

If could make money online by taking my knickers off I would :eek: But I'm warned NOBODY wants to see that so I'm doing it the old fashioned way.

Charge ppl to make you keep them on. lol

Jokes aside this is a very interesting thread.

[sm1]

Interesting thread - was looking at something similar in another thread about payments via sms for club tickets... something I'm still considering and looking into. ;)

[movietub]

Anyone got any idea what is blocking price drops for CC processing? Certainly the process itself is entirely automated. For example why do Paypal charge 20p per transaction? Why not drop to 10p tomorrow? Why 2-3% Why not 0.01%?

I appreciate their are costs which must be met but the actual cost per transaction - a process which typically lasts 10 secs max must be tiny.

I suppose there are large marketing budgets involved but then if they halfed their prices internet gossip would probably be all the marketing they need.

I read an article ages ago about Google and how they have the infrastructure to offer payment processing at tiny additional cost to themselves (or us). This goes someway to explaining the extremly low cost Google Checkout. Shame this is so limited still.

No doubt there are blocks to a price drop - so what are they?

[edmondscommerce]

greed probably

no doubt there are a bunch of overheads related to chargebacks / fraud as well

[movietub]

greed probably

no doubt there are a bunch of overheads related to chargebacks / fraud as well

No doubt many overheads, too many to list I'm sure! Still seams like a likely average of 50p or whatever per pay pal transaction adds up to a lot of cash. In about 6000 transactions we have put through them only 3-4 times have we required any sort of human input to put things right. Thats £3000 we have contributed to them! And I'm sure one of their servers will process ten thousand + of transactions a day without breaking sweat and requiring no human input whatsoever.

As for the greed thing - if it was greed alone why not under price everyone and take a much bigger % of online card processing business? Seems that a price war is a little overdue by now...

[sm1]

Do Iridium provide an API? Sorry for going off topic :)

[Astaroth]

There are retailers that are getting charged fractions of a percent rather than 2-3% but it all comes down to volume, security and ability to negotiate.

The other issue is that whilst much is automated there are many companies involved in the chain all wanting their slice of the fees plus there has to be a significant support network to deal with frauds, errors, queries, disputes etc

Micropayments are an interesting idea and I must admit I thought things had gone on further than they appear to have.

[IridiumCorp]

Do Iridium provide an API? Sorry for going off topic :)

We certainly do. We even provide out pre-written code packs which is about 95% of the work done for you.

[sm1]

Thanks Sean :)