Micropayment site. What payment system should I use?

[hulahoop]

Hi,

i am thinking of starting a micropayment site with $1.00 as the starting price. I know of Payp al but what other options do I have that is reliable and charges low or base on percentage. Most payment system charge x% + $x amount and the killer would the $x which would take up almost half of my $1.

Any suggestions?

I heard of authorize.net but I understand they don't serve outside US merchants and customers. Is that true?
Also there is this thing that I don't understand about the terminology merchant account and payment gateway. I thought they were the same but for authorize.net I think it is different. I could be wrong. anyone can help me out here. Thanks.

[gpilling]

I don't know much, but I had an employee look into starting up a payment processor once and he reported back that we could do it with $50,000 to startup - covering fees, capital reserves etc. .. Not sure if his numbers were totally correct or not. We were looking to do something like CREloaded at the time.

[topr8]

>>terminology merchant account and payment gateway

merchant account: the contract you have with a card processor allowing you to accept credit cards, the processor will charge you fees

payment gateway: card processors will not allow just anyone to interact with their database, thus you need to go through a gateway to connect to the card processor do the actual card processing.

card processors sometimes have their own gateway which they will bundle into the deal making it seem like you don't need a gateway.

[topr8]

>>i am thinking of starting a micropayment site

i don't think anyone has really come up with an effective micropayments system yet, when it happens it will be revolutionary i think.

[bcc1234]

topr8, actually a merchant account is an account at the acquiring bank. The bank underwrites your receipts and guarantees that in the even of a chargeback, all funds will be covered. So if you charge people up and run, the acquiring bank will have to pay all the money back for you. A merchant account is not (necessarily) held with the processors.

But as you mentioned bundles, the same thing happens with merchant accounts. Banks might hook you up with a processor they are using. Or the processor might hook you up with a merchant account in a bank with which they are working.
So it might seem like those are one and the same.

As a matter of fact, with three entities: acquiring bank, processor, gateway -- either one will hook you up with the rest. So it might seem like all you need is to contact one company and they'll set you up.

[Demaestro]

i don't think anyone has really come up with an effective micropayments system yet, when it happens it will be revolutionary i think.

Look into bitcoins.

It really is going to be a revolution. I have 2 spare boxes at home now running the P2P service. I have generated a few coins for myself already.

[topr8]

bcc1234

yes :) ... i was just trying to keep it as simple as possible.

[piatkow]

There are micropayment solutions around but those that I have checked out all have a pretty high standing charge. The little, and even medium sized, guy is probably stuck with the % + fixed amount providers.

Any payment processor needs to have the facility to process and pay in your local currency so possible solutions will vary by country.

[bcc1234]

i don't think anyone has really come up with an effective micropayments system yet, when it happens it will be revolutionary i think.

Oh yes. Once someone comes up with a micropayment system that doesn't require some sort of a larger deposit or some exchange system, then a lot of things will change. Virtual goods will rule the net.

It's a shame that paying via SMS isn't a popular option in the US. So far, this is the closest to reality (but really expensive) way of collecting micropayments from people.

[Demaestro]

It's a shame that paying via SMS isn't a popular option in the US. So far, this is the closest to reality (but really expensive) way of collecting micropayments from people.

The reason this hasn't caught on is the fees are outrageous.

I run and manage several SMS campaigns and in most cases you are lucky to get 50% of the total charged.

The wireless companies take about 49% of the money to cover billing and collection costs. Since the wireless companies do all the billing and collections the charge back rate tend to be very high, usually the Telco's customer service agent's first offer when someone calls to inquire about a charge on their phone bill is "I can reverse the charges for you"

They never ask, did you receive goods or services, they just offer to refund right out of the gate. This is known as "on deck billing" and I have done 2 SMS on deck billing campaigns and both of them we got less than 50 cents on the dollar back.

Honestly, you all should be looking at Bitcoins, I really think they are going to be the next "little" thing.

[bcc1234]

The problem with Bitcoins is that if it ever becomes mainstream, then botnet owners will use the CPU power of target machines to generate coins on a massive scale. That will devalue coins.

But the main problem is adoption. Unless I can find enough people who would buy those coins and pay me real currency, all those coins are useless. And I doubt the liquidity will ever be high enough to be useful in day-to-day applications.

If micropayments ever materialize, it will be either done by the banks or by some large company like Google.

[Demaestro]

bcc, I share your concerns, except I don't think the coins will be devalued by botnets, there is a finite amount of coins.

If there is ever going to be a micro payment system it is going to resemble bitcoins regardless of who implements it.

The issue here are fees. When you are dealing in penny profits you can't be losing pennies to fees, unless you decentralize the payment process you are always going to have someone trying to collect fees from you.

[hulahoop]

Yeah my problem is that $x in the whole % + $x fees equation. It is usually like $0.30 to $0.50 or some like 2 checkout that is $1 per transaction. It is really too high.

I checked and I tried to call someone at authorize.net but it is a holiday. Is it true that their rates are $0.10 per transaction but I understnad the monthly is high. Is that right? Are the a all in one (payment gateway and merchant account) provider? So what is with the resellers? Is it better to get from them separately?

Wonder how iTunes accepts payment and what is their rates? Who are the current microitem sites arounds now anyway? I can't think of too many. So does that mean 50% of cha-ching goes to fees! Woaw.

[piatkow]

The big boys probably pay a massive up front fee and ****** all per transaction. They have the turnover to cover it.