PayPal To Launch Micropayments Product

[travelin cat]

According to the company, the new product will include specialized payment support for micropayments for online video, music, games (including the sale of virtual goods and currencies), paid content, books and software.

[techcrunch.com...]

[Robert Charlton]

Micropayments are something I've always thought could solve a lot of problems with regard to creative content on the web... as content does cost money to produce.

Because of the fragmented experience of the web, though, various questions arise about how micropayments might work. It appears that they've given this some thought....

We’re told that PayPal wants to replicate the act of putting another quarter in a gaming machine to continue to play a game, except in an online equivalent. The company wants to lower the friction point of leaving things, whether that be within a game, while reading content, or watching videos.

[rollinj]

PayPal has always accepted micropayments, they just take a ridiculous percentage.

Interested to see what their cut is on this "new idea".

[koan]

Yeah I think Paypal works with either a small percentage or a minimum amount (say, $1-$2), whichever is the highest in a given transaction. With micropayments, that $1 could be 50% of the payment, so it isn't workable.

[Sgt_Kickaxe]

including the sale of virtual goods and currencies

This after they BAN the listing of virtual (game) goods from eBay ?
This after the sale of virtual goods in 1998/1999 basically vaulted ebay to the top of auction site popularity?

Could it be that eBay is finally realizing they need to be what their users want them to be? That's been missing for some time now.

Since they banned virtual goods from being sold on eBay in large part because of their cries about fraudulent payments, and they seem to be changing its stance on virtual goods payments, perhaps they'll allow the sale of virtual goods once again? There are countless hundreds of thousands of people who buy/sell virtual goods off ebay daily, it's a billion dollar industry even if taboo to many.

[httpwebwitch]

I've been using their "micropayment" rates for quite a while now. It's ideal for products under $12.

But it's still no good for people who want to charge, say, $0.25

I'm eager to hear what this is about. So far it's all just bloggers quoting each other without really saying much, hinting that we should all go to their x developer conference in San Fran on Oct 26

[iThink]

Paypal has launched and re-launched micropayments pretty much every year since 2005 with the exception of 2008. Once can search on google for older press releases. Interestingly this launch/re-launch happens every year in October/November period. May be it is their marketing team going though same old things-to-do list every year.

[Robert Charlton]

But it's still no good for people who want to charge, say, $0.25

A quarter is what the article hints at. I think that for a large newspaper site, some charges might need to be lower, and they would have to take into account users coming and going, bailing out in the middle of articles because they didn't like them, etc.

For many types of media, micropayments aren't like paying a movie admission and planning an evening around it. That might work for a movie online, but probably not for a magazine article.

[rogerd]

I've been hearing about the promise of micropayments for more than ten years, and nothing has come of the talk. Logically, it would be a great way to monetize low-value content.

Before the Web took off, I used Prodigy. While they didn't have micropayments, they had some premium services (I seem to recall a business database tool) that charged a rather nominal amount per minute of use. I liked that model vs. an "all you can eat" subscription as I was a light user. I could go in, get what I needed, and only spend a dollar or so for a quick visit.

I could see it being annoying, even if effective. Imagine a site where you start reading an article and get to the end of the first page, where you find a "Pay $.50 to keep reading." Ugh.

[dpd1]

Yeah, from the customer side, it just sounds annoying to me. But then I'm old-fashioned... I don't buy individual songs either.

[UserFriendly]

Bear in mind that if you're asking 25˘ per article, the scrapers will simply offer your content for 10˘.

I still can't see micropayments working, even if the payment processors can decide on how to charge commission on it.

[httpwebwitch]

This has been a nagging void in e-commerce that people have been whining about (myself included) for 10+ years. I have plenty of products that I would sell for $0.69 each if it was economically feasible to do so.

Provided their service is good and the fees are reasonable, this could be a fantastic vehicle for online charity fundraising. It's a well-established wisdom that fundraising from a large volume of small amounts is usually more successful than than soliciting smaller volumes of larger donations.

Micropayments aren't a difficult concept. It's just a matter of pooling lots of tiny transactions into aggregate transactions. However no one in the banking cartel has had the kajones to try it, the popularity or infrastructure to make it successful, or the willingness to let up on predatory transaction fees that make it unfeasible.

PayPal is in an ideal situation to try this.

[piatkow]

I have seen two models for micropayments in the real world.
1. User pays the fee - I can pay for parking with my phone but have to pay the processing fee - I just keep a bag of small change in the glove box instead.
2. User deposits money with the service provider from which the micropayments are deducted and is topped up when used. Many transport operators use this option for paying fares by smart card.

The only way micropayments can be cost effective on line is for user and merchant to have accounts with the same processor. Either the merchant insists that customers have an account with a particular processor and risk complaints or end up with accounts with every player in the market. The big players of course will be able to take small, but not micro, amounts on deposit (pay five pounds which runs down at, say, a penny a page)

[Robert Charlton]

In model #2, where the user deposits money in advance, do banking regulations enter into it if the operation, say, becomes large enough?

Consider this a completely naive question, based on one dinner conversation once with a banker.

[piatkow]

In model #2, where the user deposits money in advance, do banking regulations enter into it if the operation, say, becomes large enough?

Depends on the jurisdiction. My understanding of the Transport for London scheme is that it isn't covered as long as they restrict usage to paying TfL fares. (Quickly adding the qualification that I am not a lawyer and left the banking industry over 20 years ago).

I would add that anybody planning to take deposits from customers in this way should be careful to check all local and national regulations in their jurisdiction. (For example you may be required to hold the money in a dedicated client account)