Hom, James

Business on the Information Super Highway

Micropayments

I. What are micropayments

A. How they work

1. Credit card companies lose money on small transitions

2. Lump sum, an online wallet

3. Stay in business from interest on money, or charging a small finance fee

B. Who needs them

1. People do not always want to enter credit card data for small purchases

2. <<perceive it to be less risky>>

3. Businesses selling small items

a. “forty percent of online merchants want to sell items for under $10” http://www.webtechniques.com/archives/2001/12/hurwicz/

b. People to charge little bits at a time

i. Newspapers and Magazines online

ii. Data online

iii. Books, by the chapter or page

iv. Articles

v. Donations to people whose website you enjoy

vi. Music and Video on demand

vii. Games

viii. Lotto

c. << where much processing (mediation) takes place, so that many people are owed a bit – say for : source document- annotation – abstract – smart search service ...>>

C. Who provides them (abbreviated list)

1. Visa

2. Compaq

3. CyberCash (purchased by VeriSign)

II. Why aren’t they working

A. Lack of trust

1. “users and merchants are afraid of the unknown” http://www.webtechniques.com/archives/2001/12/hurwicz/

2. “merchants don't like having to install special software or link their shopping carts to the micropayment provider's Web site” http://www.webtechniques.com/archives/2001/12/hurwicz/

B. Too many options – dozens of companies

C. Not standardized yet

1. “First, there was no specification for a Per Fee Link Handler (PFLH)”

2. “no standard API to interface an e-wallet to the PFLH”

D. PayPal is working

1. Success based on e-bay’s use

2. Similar, but not identical to micropayment ideas

III. What to expect in the future/Alternatives – who will come out on top?

A. Visa is already established –<< reluctance to give up business, even if lossy now>>

B. VeriSign

C. Microsoft passport uses credit cards

D. PayPal

<<Your conclusion?>>