- Micropayment
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This article is about small payments. For small loans, see Microcredit.
A micropayment is a financial transaction involving a very small sum of money and usually one that occurs online. PayPal defines a micropayment as a transaction of less than 12 USD[1] while Visa prefers transactions under 20 Australian dollars,[2] and though micropayments were originally envisioned to involve much smaller sums of money, practical systems to allow transactions of less than 1 USD have seen little success.[3]
One problem that has prevented their emergence is a need to keep costs for individual transactions low,[4] which is impractical when transacting such small sums[5] even if the transaction fee is just a few cents.
Contents
History
Micropayments were initially devised as a way of allowing the sale of online content and were envisioned to involve small sums of only a few cents.[5] These transactions would enable people to sell content on the Internet[5] and would be an alternative to advertising revenue.[6]
During the late 1990s, there was a movement to create microtransaction standards,[5] and the World Wide Web Consortium (W3C) worked on incorporating micropayments into HTML, even going as far as to suggest the embedding of payment-request information in HTTP error codes.[4] The W3C has since stopped its efforts in this area,[4] and micropayments have not become a widely used method of selling content over the internet.
Early research and systems
In the late 1990s, established companies like IBM and Compaq had microtransaction divisions,[5] and research on micropayments and micropayment standards was performed at Carnegie Mellon and by the World Wide Web Consortium.
Millicent
Millicent, originally a project of Digital Equipment Corporation,[7] was a micropayment system that was to support transactions from as small as 1/10 of a cent up to $5.00.[8] It grew out of The Millicent Protocol for Inexpensive Electronic Commerce, which was presented at the 1995 World Wide Web Conference in Boston,[9] but became associated with Compaq after that company purchased Digital Equipment Corporation.[7] The payment system utilized symmetric cryptography.[10]
NetBill
The NetBill electronic commerce project at Carnegie Mellon university researched distributed transaction processing systems and developed protocols and software to support payment for goods and services over the Internet.[11] It featured pre-paid accounts from which micropayment charges could be drawn.[12] Initiated in 1997, NetBill seems to have died completely sometime after 2005.[13]
IBM Micro Payments
IBM's Micro Payments was established c. 1999,[14] and were it to have become operational would have "allowed vendors and merchants to sell content, information, and services over the Internet for amounts as low as one cent".[15]
Online gaming
Main article: Virtual goodThe term microtransaction is sometimes used to refer to the sale of virtual goods in online games like World of Warcraft.
Current micropayment systems
Current systems either allow many micropayments but charge your phone bill one lump sum or use funded wallets.
The Exception Magazine
The Exception Magazine, an online newspaper based in Maine, launched a micropayment system in July, 2010, which uses a cell phone for payment.[16]
Flattr
Main article: FlattrFlattr is a micropayment system (more specifically, a microdonation system) which launched in August, 2010.[17] Actual bank transactions and overhead costs are involved only on funds withdrawn from the recipient's accounts.
KlickEx
KlickEx is a Polynesian peer-to-peer interbank clearing network that enables micro-payments to be created and funded from local bank accounts in Australia, New Zealand, Europe or the UK; and be remitted to or from bank accounts in the South Pacific, or directly onto Mobile Phones. KlickEx users (which include by default, most mobile phone users in Polynesia/Micronesia) are connected to real time payments to or from more than 70 million bank accounts world wide.
M-Coin
A service provided by TIMWE, M-Coin allows users to make micropayments on the Internet. The users' phone bill is then charged by the mobile network operator.[18]
Payclick
A micropayment system set up by Visa Inc in Australia, Payclick allows users to fund an account that is then drawn from when purchases at participating online retailers are made.[2]
Zong
Zong mobile payments is a micropayment system that charges payments to users' mobile phone bills.[19] This service can be used to purchase virtual goods in online games and social networks.[20]
References
- ^ Micropayments paypal.com
- ^ a b Visa launches new way to pay online payclick.com.au, 24 June 2010
- ^ In Online World, Pocket Change Is Not Easily Spent nytimes.com, August 27, 2007
- ^ a b c Micropayments Overview w3c.com
- ^ a b c d e Toward a Click-and-Pay Standard wired.com, 11.03.99
- ^ Common Markup for micropayment per-fee-links 1.1 Origin and Goals W3C Working Draft 25 August 1999
- ^ a b Compaq to license digital cash technology cnet.com, December 23, 1998 6:10 PM PS
- ^ Millicent (Archive) archive.org
- ^ Millicent What's New -- June 1997 (Archive) archive.org
- ^ 2.6.10 Micro Payments (micropay) bof Current Meeting Report, November 8'th 1999 Internet Engineering Task Force - ietf.org
- ^ The NetBill Project (Archive) archive.org
- ^ About NetBill (Archive) archive.org
- ^ Archives of Netbill sites archive.org
- ^ Archives of IBM Micro Payment sites archive.org
- ^ IBM Micro Payments (Archive) archive.org
- ^ "Exception Magazine Launches News Industry's First Mobile Micropayment System | The Exception Magazine". Exceptionmag.com. 2010-07-15. http://exceptionmag.com/business/media/0001805/exception-magazine-launches-news-industrys-first-mobile-micropayment-system. Retrieved 2010-09-04.
- ^ Steve O'Hear (August 12, 2010). "Flattr opens to the public, now anybody can ‘Like’ a site with real money". TechCrunch Europe. http://eu.techcrunch.com/2010/08/12/flattr-opens-to-the-public-now-anybody-can-like-a-site-with-real-money/. Retrieved August 13, 2010.
- ^ "MCoin Product Lines - Mobile Marketing magazine". Mobile Marketing Magazine. 2011-06-30. http://mobilemarketingmagazine.com/content/timwe-launches-m-coin-brand-0. Retrieved 2011-07-02.
- ^ Fear not! Let’s get you on the right path, my friend: Consumers Zong Official Site
- ^ For purchase of virtual goods, see "Zong Lets You Bill Web Apps To Your Phone". TechCrunch. 8 September 2008. http://www.techcrunch.com/2008/09/08/zong-lets-you-bill-web-apps-to-your-phone/.
- For use in games and social networks, see Where to find Zong Zong Official Site
External links
- W3C Micropayment Working Group
- Second generation micropayment systems: lessons learned (PDF), Robert Parhonyi
Categories:- Micropayment
- Electronic commerce
- Payment systems
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