Wednesday, March 7, 2012

Micro Payments


A while back there was a lot of talk about micro payments, but nothing much has come of them. The best web payment systems we have are Paypal and Amazon 1-click.

But it seems to be that micro payments are very important. There has been much talk about how to monetise the media on the internet. Maybe Murdoch will be successful with his Daily, but only to a limited audience, and that is still something of an old world approach.

But suppose you had a really easy to use micro payment facility – then people could charge per article, or per section, rather than per issue. Of course Murdoch doesn’t want to do that. He wants to lock in subscribers to generate steady and large cash flow. And, to be fair, he is appealing to people who want to commit to a particular brand of writing and editing, rather than web grazers.

But consider if you only charged pennies or cents for an article, with a one click payment decision. Most people (well, most internet users) would not need to hesitate to make that decision. One million readers at 10 cents a time is $100,000 – not peanuts. And 100 million at 1 cent a time is $1,000,000 – even better. And who is going to think twice about spending 1 cent? – not even me, and I’m pretty mean. That could even be a zero click decision (perhaps I should patent that).

Of course this assumes that the transaction cost is small compared with the cash transfer, so 1 cent might be difficult, but surely 10 cents is possible. Each transaction would not have to be converted to a banking transfer. Your PC or phone or iPad could be pre loaded with a limited cash value in the same way that various payment card schemes are now using. Each micro payment would then come from this cash pot until it needed topping up.

There are security issues, but no more it would seem than with Paypal et al. The limited amount of cash stored in the device would be an upside loss limiter, and maybe one day we will have simple biometric security built in to smart devices.

So why haven’t we seen this already? Many reasons I guess, the big players are fairly happy with the status quo, and you need a big player. Market penetration has already been taken by Paypal, Worldpay, Amazon. Media companies are running scared. Despite the fact that music can now be bought per track, rather than per album, their payment model is still predicated around the vinyl era.

What we need is a Branson to come to the rescue. Here’s hoping.

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