Micropayments
Have you ever heard of micropayments? Micropayments are tiny amounts of money that are transferred rather than collected with traditional payment systems. The term micropayments at one time actually referred to one/one thousandth of a dollar, but now it means any amount that is too small to be processed by a credit card or any other type of electronic processing system.
Micropayments are popular today in part because of the Internet. Content for a fee is very popular on the Internet, but the charge of processing such small amounts, plus a percentage of the fee, from individual credit cards is too costly. Micropayments work well if you are able to maintain a high volume of viewers to which you only charge a low content price.
The possibility of earning money through either charging for content or posting the content for free and displaying sponsor ads is very well accepted today. Some content providers even charge a subscription fee – such is the case with many magazines. Those that do not charge a subscription fee obtain revenue by selling advertisement in the magazine. Still others seek donations from content viewers.
People the view the content, but do not look at the advertising are known as free riders. However, the extra cost of bandwidth of the users that do not purchase advertising have caused many web sites with free content to fail. In the end, the bandwidth costs override any revenue generated from advertising. Micropayments may help solve this problem. However, those arguing against the use of micropayments say that a subscription based fee is better and that micropayments actually generate less revenue than advertising.
If micropayments were used, how would you get the funds from the customer? You can’t bill each customer for $1.00 or less. But one solution may be the use of “tokens.” You can charge the customer’s account for a fixed amount of tokens, which they could then use as “microcurrency” on websites that accepted the tokens.
For more information on micropayments, the praise, and criticism please check out Micropayments.
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