The discussion below seems terribly dated. There are presently 2 effective MicroPayment systems in use. The first is small scope - Google's AdWords service, which enables sites to obtain micropayments in exchange for featuring google ads. The second service is SMS payments. This works and is very acceptable to consumers. AmericanIdol is probably its best known use, but you can pay for everything from parking to coffee this way. There are two modes. In the first your customer SMSes some short code that charges them via their mobile phone bill. The second works just the same way except that you send the customer an SMS and the charge occurs when they acknowledge it. Only real problem with the SMS stuff is the operators charge an arm and a leg - per transaction fees generally exceed 50% of the consumer charge. OTOH most digital content expenses are very low, so content providers aren't hurting. There are still a bunch of johnnies, including paypal, offering SMS micropayments in conjunction with a pre-funded account of some sort. But the pure SMS solution is neatest because your customers don't need to open any account or even talk to the micropayment processor - their payments simply turn up on their mobile phone account. And they're NonRepudiable. ---- ...from OnlinePayments discussion: MicroPayment''''''s -- the ability to efficiently perform financial transactions for small amounts. MicroPayment''''''s -- the ability to efficiently nickel and dime users to death. Theoretically, micropayment technology enables one to make money by selling something >cheap< to a very large number of people. This would enable people to pay small amounts of money to read articles on web sites, instead of relying on advertising. Of course, this can never ever work for reasons ClayShirky points out in * Fame vs Fortune: Micropayments and Free content ** http://www.shirky.com/writings/fame_vs_fortune.html Others have pointed out the same thing, often with reference to Shirky: * The Case Against Micropayments, http://www.openp2p.com/pub/a/p2p/2000/12/19/micropayments.html Basically, '''users hate micropayments''' and since they have always and '''will always''' hate them, micropayments will never, ever work. Excluding situations where a producer (such as a utilities company) has a total monopoly on the market and ''imposes'' micropayments ''against the users' will''. Given this one simple fact of reality, everything below is just scholasticism arguing about how many angels will fit on the head of a pin. Or to put it in more modern terms, it's crap. OTOH, ScottMcCloud gives a reasonable contrary opinion at * http://www.scottmccloud.com/home/essays/2003-09-micros/micros.html questioning Shirky's presuppositions. But he makes his own interesting presuppositions. First that art is not a commodity and second that a UniversalCatalog making both free and non-free content equally accessible will not exist. ---- The main thing holding back the acceptance of micropayments is the lack of an effective '''cheap cheap cheap''' cash transfer infrastructure. Currently, we are using credit cards, but the cost of each transaction is very high. On the order of dollars. Thus amazon.com is taking a loss leader on StephenKing's little online publishing experiment (StreetPerformerProtocol). Now, there will likely never be a pay-by-transaction based system that will be cost effective. However, it is possible to offer a micropayment service without charging fees to anyone. The company merely holds onto the transferred money temporarily, collecting interest on it. This is what Mondex does (did?) with their debit card system, having an active float in the millions of dollars. But, there is a catch. In order to avoid, or at least mute, the initial transfer cost from the bank to the service, the customer has to buy a number of credits from the service. So, you'd have to put money on your debit card, or buy "eCash" or something similar. This is obviously a pain and, with the flighty nature of web companies, very risky. If the service goes bankrupt, your cash is theirs. So, the only real way this will happen is if banks themselves offer this service, because they will offer the seamless transformation between online credits and actual money. Probably without a charge to you, if they're smart. [Or, if they're really banks, with a lot of useless service charges.] -- SunirShah Actually, these problems have been solved technically. I worked briefly with the MilliCent team, one solution which works down to $0.001. The problems seem to be commercial. -- SteveFreeman * Shouldn't a milli-cent (1/1000 of 1/100) be $0.00001? ''Of course, if a third party wanted to offer this service (meaning someone other than banks), the simple thing to do would be to accept credit cards in addition to deposits. Thus, many micropayments could be rolled together to bill the consumer. This service would take a loss on low volume consumers, but would make a profit on high volume consumers. Plus, they could take cash and hold it. That might be a bit more risky, but I'd be willing to try depositing $20-$50 in such a company. Except for I don't really want to be NickledAndDimedToDeath.'' GoldBackedElectronicMoney as well as TechnoCash and other InternetMoney systems have gone down the road to making possible a voluntary MicroPayment ---- A related route is to advance customers a certain balance, then force them to replenish them (from any source) when they are expended. This is the typical electric company/phone company metering approach. BradCox addresses this and several related issues in SuperDistribution. It's worth reading. -- TomStambaugh ---- If you have a burning desire to make a micro payment towards my happiness http://opendesign.cx/gold.htm will let you do so ;) Of course everyone finds paying a tiny bit is actually a hassle compared to paying a larger amount once off, so you can select just how much happiness you want to contribute. If every artist embeded contact details in their work, then if I espescialy enjoyed it one day I would be moved to fund them. fairtunes tried this but was a bit of a flop. Well not really a flop, just not getting enough artists and napster fans. How do you embed financial details into a work when the rights for that work may be sold later on? Should CopyRight ever be able to be passed or assigned on to someone other than the original author? I know I feel a lot less motivation to pay a record label than I would an artist. But then what if the song writer was someone else again? Who but a corporation can take credit for a movie? Re-imburse good performances by individual actors? Perhaps there are no answers and this is all just some ramblings, you all know how to edit. ---- The problem with a MicroPayment is that there is a per-transaction cost in the customer's brain. Most customers have to think about it before they spend money. That thinking exacts a cost. ''When I have made a payment to a site I have used, I felt good about it, best 20c I have given away, might not make a huge difference in the scheme of things but took little effort and would help if lots of people did it'' I do think people should receive micro-payments for their web pages. But probably the best way to do that is to set up some kind of company to put a single interface on all those suppliers. "Pay $9.95 per month and have access to 100,000 of our authors' web pages!" the company would say. And it would analyze traffic and take the money and divide it up among the page authors according to their popularity. ''I would find paying 20c to a single site a lot more appealing than paying a $9.95 subscription to a lot of home pages... with a subscription service, I expect to see or be possibly interested in most if not all of what I'm getting. With home pages, most likely I will only be interested in 1% of them, and only ever see .1%, so even though the payment would get divided accordingly, I would feel cheated. -- DanielChurch'' This is getting dangerously close to knowledge for money. If you can't afford it, you can't 'know' it. ---- With the rise of zillions of Likes in SocialNetwork''''''s a LikePlus with built-in MicroPayment might become an attractive app. -- FridemarPache ------- MicroPayment''''''s can become a good SoftSecurity measure, e.g. against spam, denial-of-service attacks, and so on. But I think it needs to work in both directions. For example, if you have to pay $0.01 to send an e-mail to someone who hasn't whitelisted you, but you get $0.01 in turn when they have a response, we could reduce spam by several orders of magnitude (and probably increase its quality) for rates that most people find acceptable.