Whatever Happened to Micropayments? 318
prostoalex writes "Remember Flooz? Or Beenz? With a few notable successes (PayPal, and that's about it) online micropayment industry is saving its success stories for future generations. New York Times reports about two nascent micropayment systems, one coming out of Stanford, one out of MIT, that are supposed to help the content producers and Internet users to engage in less-than-a-dollar financial transactions without huge overhead costs, so typical of credit card payments. BitPass requires you to purchase a virtual debit card with a certain amount on it to pay for products and services, and PepperCoin consolidates numerous micropayments into one bill that is then split between the content providers that managed to sell their product to the Internet user." I still believe that single penny transactions will revolutionize the net.
I dont get it... (Score:4, Insightful)
Ok.. (Score:5, Insightful)
Call me an old curmudgeon but I think micropayments are just another new way to be (pardon the pun) nickel and dime'd to death. My bank already does it with service charges, my phone company does it with every little "feature", my cell company does it, et al ad nauseum.
The only ones that will PROFIT!!! from this are the big companies pushing it on us.
Sounds promising... (Score:2, Insightful)
Micropayments just became nanopayments... (Score:5, Insightful)
I believe the problem with micropayments is the lack of a 'lender of last resort', namely a government backing the scheme. In countries where governments have shown an interest (Finland, Japan,...?) micropayments seem to work just like any other kind of virtual cash.
Certainly there is no technical hurdle to overcome: compared with giving someone your credit card and saying 'I trust you to take what I owe you and no more', and sending them a 'cheque' by email (PayPal) or by SMS (a system I wanted to make), it's clear that a payments system does not have to be perfect to succeed, it just needs backing from banks and government.
Presumably banks are wary of real micropayments because they make so much money from credit cards, the main alternative.
Presumably governments are wary of real micropayments because they see their tax bases being nuked.
I don't see either of these fundamentals changing soon.
PayPal succeeded because they found a niche that was opening at the time, and were were very good, very lucky, to exploit it fully. But without credit cards in the background, PayPal would never have worked.
The MicroPayment conundrum... (Score:5, Insightful)
Let's say Slashdot joins MicroPayment provider X, and New York Times Online joins MicroPayment provider Y, I need to have accounts with X and Y if those 2 websites happen to be in my favourites.
Interoperability needs to be sorted out right up front; otherwise no one company will be successful.
The obvious players are Visa and Mastercard. I suspect that they are just treading water until there is a whiff of possible competition, at which point they will swoop in together make MicroPayments happen between them.
Missing the Obvious (Score:5, Insightful)
One of the reasons a 3 cent transaction is doable is that there is not a business making the transaction unworkable by adding a fee. The voter is once again uncouncious, failing to force government to live up to its obligations.
DIY (Score:2, Insightful)
Taco, if you really believe that, then Slashdot is the place to launch TacoBeans the new micropayment solution from OSDN. Seriously.
If you don't really believe it, why did you say it ?
The Right Idea at the Right Time (Score:3, Insightful)
1) They debuted at the height of the dotcom craze, when advertising money, venture capital, and ludicrous business plans were everywhere. Back then, users were getting so much of their online experience subsidized by these factors that micropayments weren't attractive to them. Now, in the depressed post-boom environment, micropayments are becoming attractive to consumers again.
2) Most micropayment companies focused on the wrong markets. Micropayment companies have traditionally focused on large content providers, trying to get already successful businesses to change their business model to something their consumers were skeptical or even resentful of. BitPass, however, has instead focused on a bottom-up approach, marketing to individual content producers like webcomics creators, artists, and musicians, who haven't been able to charge what their work was worth until now. I think this is going to be the deciding factor in their success.
I'm working on a BitPass user group site to help the BitPass community grow. If you're curious, I'll post to my journal [slashdot.org] when the site is up.
No. Micropayments are dead. (Score:3, Insightful)
The amount of time, effort and money poured down this rathole is really sad.
Re:Missing the Obvious (Score:1, Insightful)
Who cares about the tech? (Score:4, Insightful)
Until you can convince consumers and possibly their service providers to accept micropayments, you might as well employ trained chimpanzees to do the actual processing.
A bad idea that shoud have stayed dead (Score:3, Insightful)
Ugh. Micropayments were a bad idea back in the dot-com days where they were concieved, and they're still a bad idea today. People won't visit sites where they are going to be (literally) nickel-and-dimed to death. People don't want yet another financial account to keep track of, yet another critical login to remember.
Even if one of these schemes manages to attract an appreciable following, large enough to be noticed by the credit card companies, then what? All it would take is a simple policy change to put them out of business. Maybe $50 gets unlimited sub-$5.00 transactions per month, or something like that. The whole micropayment concept is necessitated by the desire to avoid high transaction fees on credit card payments. Once the credit card companies wake up and provide a plan tailored for the smaller retailer, the entire micropayment industry disappers. Perhaps it will take a micropayment company that looks like it is on the verge of real success to do it, but as soon as they attract the attention of the big boys, they will be wiped out, pretty much overnight.
Any business that can be invalidated by a policy change by a larger, competing institution is not, in the long term, viable.
Re:Ok.. (Score:1, Insightful)
Re:Missing the Obvious (Score:3, Insightful)
Huh?
What on earth are you talking about?
It is not up to the government to provide an accounting system. The government (at least the US, European, and most Asian governments) does, indeed, provide a robust and useful currency system. Most even have currencies that are available in "useless" denominations, such as the penny, the pence, the cent (EU), and 1 Yen.
The issue is not the currency system. The issue is that micropayments have overhead that vastly outweigh the actual payment. This overhead is in accounting, and it's not going to magically go away. You must show where ever penny comes from for at least two reasons - 1) The government wants to know, so it can tax you. 2) The consumer wants to know, so that you are accountable and they can get a refund if they were overcharged.
There's other reasons to keep track of all the pennies too - like figuring out if you're going to make money or not, doing trending, etc. But really the biggest issue is #2 -- and if you're not accountable to me, your customer, then screw you -- I won't do business with you then.
All of the micropayment systems I've seen have tried to reduce the accounting overhead merely through reducing billing overhead -- consolidate users by financial institution and request a lump sum. It still doesn't resolve the issue that the bank, credit union, etc. will need to take $.05 from account 1, $.08 from account 8, etc. And this is what kills micropayments. And will continue to kill them for the forseeable future.
Unless, of course, you don't have a problem with businesses not being accountable to their customers.
Re:The MicroPayment conundrum... (Score:2, Insightful)
Re:Paypal's success was based on $10 free/eBay (Score:5, Insightful)
You can't forget about the spammers
Now, if you DO want to charge for receiving emails, charge some sort of a flat rate, scaled slightly by bulk; if you recieve thousands of emails, your rate goes up. If you recieve a couple a week, the rate is a bare minimum. This would, again thinking about spam, require that the companies charging for email access use extremely good spam blocking systems, and provide a method of allowing users to quickly and simply report spam that slips through the cracks, perhaps an address to forward to, which is randomly checked by humans in order to prevent abuse. This way, it is entirely up to the user to deal with any spam that doesn't get blocked, and if they get charged for anything they didn't want then it is entirely their fault.
So, in order for a company to charge for incoming email and not start hemorrhaging customers, they will have to both offer a quality of service significantly better than 'free' services, and also provide a means for the user to not get economically raped by unsolicited email.
just my oversized $0.02
(imagine if it did cost $0.02 to post on slashdot.. wouldn't that be ironic?)
Already answered years ago... (Score:5, Insightful)
To summarize, when the cost of clicking a link is only time (how long will it take to load that link on my 28.8 modem), its a relatively simple decision. When its both time and money, a judgement has to be made. Sure, for a penny a page, one might not worry about it, but nobody's going to make money on a penny a page, no matter what "they" say; that only works on click-rates the size of CNN, MSNBC, Slashdot, source-forge, etc. And even then, when they see "the bill", it'll be like getting their first credit card bill and having no idea just how much they "spent" online...then they'll be reconsidering each and every link and users don't want to do that.
Users surf or they don't. If you had to pay a per-minute charge for doing real surfing in the pacific ocean, you wouldn't surf, so (extending the metaphore) why would you do it at home? There's a reason AOL and all the other ISPs got rid of their traditional per-minute charges and people buy cell phone and long-distance plans with max minutes instead of per-minute charging; the variable at the end of the month isn't worth the hassle.
Points of View (Score:4, Insightful)
Let's look at some real-world examples:
- Take-a-penny trays
- All-you-can-eat buffets
- Free refills on non-alcholic drinks everywhere
- 6 packs, 12 packs, 24 packs (you don't just buy only as many bottles/cans as you want)
- Unlimited local calls on home phones
- 600-minute & 1200-minute cell phone plans
Maybe these aren't all completely relevant, but I just don't see paying a little bit for each click being of value to consumers. I see it as being a huge pain in the rear, even if it is all automated and trusted. (cough, Paypal, cough)I think the real problem is that much of the internet's content just isn't worth any money to us. We can get a lot of content for 50 cents per day from the local newspaper. We can get content faster from TV at no incremental cost (but arguably less convenience). The internet can be great, but I ain't paying for Slashdot. The Motley Fool already lost me when they went subscription; they just aren't worth it.
If most everything interesting went pay I think there would be enough people volunteering news/info sites and discussion boards that we could still get our free internet. We may have to move to a p2p distribution model since running a centralized site as busy as Slashdot, for example, costs a pretty penny in bandwidth.
Re:Ok.. (Score:3, Insightful)
Call me an old curmudgeon but I think micropayments are just another new way to be (pardon the pun) nickel and dime'd to death. My bank already does it with service charges, my phone company does it with every little "feature", my cell company does it, et al ad nauseum.
I think you don't understand the concept of micropeyments... Making you pay 15 dollars for some service, even if you split the payment into 100 parts does not make it a "micropayment".
A micropayment is when you pay a few cents for something without having any other obligations to the seller.
Thus, setting up a 20 dollar subscription fee of which you pay 0.01 dollar per click on a website is not a micropayment since you have to buy 1999 other 'clicks' from the same seller.
E-gold (Score:3, Insightful)
Been running for years, working really well, the only thing is the slow adoption rate and the fees. When (or if) this reaches critical mass it will be the best of all the options.
This is how i pay for my hosting and brought my domain name, not no mention a few other things.
Will work for Flooz (Score:2, Insightful)
The only people crying for micropayments are websites that produce "content" that's nearly worthless. If the content is worth something, people will make macropayments to subscribe. If the content is essentially worthless, consumers are not going to push to be charged an amount so small that they don't notice it until the end of the month, and deal with the password, account, and billing hassle of playing along.
If you're going to do that, you may as well tack on an ISP tax and create national grants for the weblog arts. It could be like all those cryptic fees tacked on to my phone bill that constitute half my monthly payment.
Oddly enough, it seems that the free market folks are the ones who insist most strongly that this has to exist. I think the market has spoken on micropayments.
DEAR CMDRTACO: (Score:1, Insightful)
Whatever.
Next.
Re:What about non-virtual 'micropayments' (Score:2, Insightful)
Even if businesses did get more money from this (which assumes that consumers currently send all their change to
Re:Missing the Obvious (Score:3, Insightful)
The same would be true of a Treasury Department PayPal. All online businesses would be required to accept it. In fact, so would all offline businesses, and I don't know how you'd make that work.
The entire financial institution in this country is build as a system of complex IOUs on top of the one and only actual legal currency in the US: green slips of paper and small tin chips.
I can certainly see the advantages of having a government-sponsored ATM or online debit card or whatever, but the impact on the economy at large, especially small businesses and independents, would be very negative.
Re:Missing the Obvious (Score:1, Insightful)
Except that while pennies do cost more than $.01 to make, I don't have to make one every time I spend one. If you and I are transacting business face-to-face, the overhead cost to me (or you) of a $0.01 transaction not greater than $0.01; in an online micropayment situation, it is.
EZ-Pass toll payments and "recharging" (Score:3, Insightful)
So perhaps one of the things that's happening with micropayments is that these "credit card auto-recharge" accounts are serving some of the functions for which micropayments would otherwise be needed.
I'm not quite sure what happens when you terminate your EZ-Pass account; I assume they send you a check for $6.22 or whatever. I suppose that if I had thirty or forty of these accounts, it might get to be annoying having $500 or $1000 tied up in tiny, non-interest bearing, spendable-for-only-a-single-purpose accounts.
rogerborn (Score:2, Insightful)
I think its great. I sell my stories and novels there for a dime or more. I have been doing it for a week, and already have had an amazing amount of sales.
Seems to work for me, when nothing else I have tried ever worked before.
Forget the honor system or begging for donations. Micropayments just works.
Roger Born
Writer, Teacher, General Troublemaker
rogerborngraphics.com
phone companies have been doing this for decades (Score:2, Insightful)
bell labs used to employ economists and psychologists and periodically re-addressed the issues of billing.
TPC managements have been clueless about the internet from the beginning, though. quite a shame.
street performer protocol - or meter-based scripts (Score:3, Insightful)
what content sites -should- do instead, is let people charge up a site-specific 'meter', with say, $5. and as they view content, you deduct micropayments from the script total. when they hit 0, you either bring the ads back for that user or prompt em for more dough.
alternately, sites could just use the street performer protocol. seems to work just fine for every worthy webcomic to date. if not enough people buy t-shirts and prints and collectibles, you close up shop and go somewhere else, or try again (perhaps in a different format).
no need for pvp or penny-arcade or homestarrunner to go to micropayments. sites less dedicated to merchandising can stick with metered subscriptions. everyone wins. (except the micropayment banks)
its just easier for everyone involved if you ask me. plus, there's no additional costs/worries/security issues that you'd get with micropayment banks charging fees, going under, getting hacked, etc, etc, etc
e-gold (Score:1, Insightful)
Just 5 cents per month (Score:4, Insightful)
I've figured out that if I could get each unique visitor to pay me just a nickel -- 5 cents -- per month, I could take down the banner advertising, quit my day job, and work on my site full time (and therefore make it that much better with more information).
Think about it. What if you had to pay content sites just $0.05 per month to access the content? Most internet users visit perhaps at most 100-200 different content sites per month. That would add just $10 to your monthly bill, and all advertising could be eliminated.
I would think that sites that are successful in selling you things -- like Amazon -- wouldn't charge you to enter, so that may even cut down on the number of sites you have to pay for each month.
With a price point of just $0.05, you wouldn't have to think to yourself, "gee, should I click on this link, do I really want to spend the money"?
I've tried various forms of banner advertising, sponsorships, commission links, etc., but I still can't earn close to $0.05 (on average) from each visitor (I'm at about $0.003 per unique).
I don't want to make my site into subcription-based, I'd rather keep it free, or free enough so that people could still easily view it.
Face it, the content on the internet has slowed down a lot since the dot-bomb. That's a direct result of there being no money in content publishing. It's closing up even further; one by one sites are becoming subscription-only. Pretty soon the internet is going to be one big magazine rack with the magazines all shrink-wrapped, and just a few free-zines in the corner.
Simply giving web publishers a few table scraps each month would dramatically revitalize what was once a very promising source of content and entertainment. Micropayemnts are one of the few ways that this can happen.
Re:Just 5 cents per month (Score:4, Insightful)
Aye, therein lies the rub. Once they discover that people are willing to pay micropayments for access, even the commercial players like Amazon won't be able to resist.
Soon, Amazon would be free for people who have purchased $n worth of stuff, and a micropayment for people just browsing. After all, if you're merely using the site as a reference, you should be happy to pay. Oh, and why should they foot the bill for you to comparison shop? Etc.
And prehaps it's redundant to state this, but the size of a micropayment is proportional to the number of sites requiring them. When every site costs $0.01 / visit, soon "premium" sites will cost $0.015, and so on. Eventually, we get the magazine situation you describe; the mechanism may be different, but the net result is the same.
Re:Paypal's success was based on $10 free/eBay (Score:2, Insightful)
And because they designed in a circle. (Score:3, Insightful)
AND because the people with the management's ear "rabidly prototyped" rather than designing and staying focussed on getting a product out, and pushed aside those in the project who asked them hard questions.
So they pushed the problems around from module to module rather than solving them. And they gave a presentation to the backers about "throway code" and how you only keep about 5-10% of the code in each pass through the loop. And this inability to undestand that a product is supposed to come out after a couple passes ("Q", not "O") ticked off their backers, who eventually backed out and left them back in the garage.
Xanadu had some good solutions - which is good, because they were trying to solve ALL the problems at once. But its "architects" never picked one and settled on it, so the rest of the crew could actually work on it (and not see their work discarded before it could even be finished).