What are Micropayments?

Michael Anissimov

Micropayments are a payment system, primarily proposed for use over the Internet, whereby content or service providers accept small payments from consumers in exchange for a correspondingly small product. For example, an online magazine might charge 10 cents per page view. Or, an investment site may charge $10 for every 10 visits.

Man holding computer
Man holding computer

Micropayments were a hot topic during the first dot com boom, when startups were looking for various ways to generate revenue over the Internet. Advertising can only go so far. In an attempt to avoid the old subscription model in which the customer makes a substantial commitment for a substantial-sized service or product, micropayments were proposed. The idea was initially embraced as ideal for the high-speed, short attention span world of the Internet, but it has yet to be widely implemented.

Nevertheless, the idea of micropayments is not necessarily dead. It is implemented by several companies over the Internet. Also, with the introduction of RFID chips on credit cards, customers can be charged quickly and efficiently for various goods and services. Sometimes these goods and services can be so quick and small that the use of micropayments can be justified.

Another emergent form of micropayments is in a system that allows people to send money to each other using text messaging technology (SMS). The World Wide Web Consortium has also developed a set of standards for websites that include micropayment systems and corresponding virtual wallets. Virtual wallets became very popular in the first few years of the 21st century, with services like Paypal that allow buyers to participate in online auctions conveniently and securely.

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In a future world filled with telecommuting and outsourcing, micropayments seem like an attractive solution. "Virtual temps" could perform short tasks for needy employers in exchange for micropayments. This would increase the flexibility of modern employment models to yet another level, giving growing businesses more options.

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