Micropayments Are Here, Just Not in The Way Some Hoped

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Micropayments Are Here, Just Not in The Way Some Hoped

So says this NYT story: Micropayment service providers may have gone bust in the last couple of years, with companies like Yaga, Bitpass, Peppercoin and others closing, but 99 cents for a song on iTunes and other places is a micropayment. So are the tiny amounts CPC ads, as well as stock-photography companies pics on the lower end. “Closed loop” systems like iTunes are the most successful in getting piecemeal payments from users, the story says.

The usual litany of problems for other systems: credit card charges for such a small payment is too high for vendors, user-resistance to small payments, etc.

Rafat Ali

@rafatali Aug 26, 2007 11:30 PM ET

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Jon Henshaw

One of the biggest hurdles, as the author explains, is transaction cost for micro-payments. The companies that came and went depended on high volume customers to make their company work. Unfortunately, there aren't enough of these companies, which is why it doesn't work if that's your model (shutting out the smaller guys with large fees and/or minimum monthly transactions). What the author failed to mention is Amazon.com's new <a href="http://www.amazon.com/gp/browse.html?node=342430011">Amazon Flexible Payments Service (Amazon FPS)</a>, which is currently in Beta. Like all of Amazon's AWS services, it allows for anyone to affordably access the service. So, in my opinion, micro-payments are finally here, and Amazon will be one of the major players, just like they are now with data storage and delivery (S3), distributed on-demand processing (EC2) and simple queue services (SQS).