Micropayment
A micropayment is a financial transaction involving a very small sum of money and usually one that occurs online. Several micropayment systems were proposed and developed in the mid-to-late 1990s that were ultimately unsuccessful. A second generation of micropayment systems emerged in the 2010s.
Overview
A micropayment is a financial transaction involving a very small sum of money and usually one that occurs online. Several micropayment systems were proposed and developed in the mid-to-late 1990s that were ultimately unsuccessful. A second generation of micropayment systems emerged in the 2010s. While micropayments were initially envisioned to involve very small sums of money, practical systems to allow transactions of less than US$1 have seen little success. One problem that has prevented the emergence of micropayment systems is the need to keep costs for individual transactions low, which is impractical when transacting such small sums even if the transaction fee is just a few cents.
Definition
There are several different definitions of what constitutes a micropayment. PayPal defines a micropayment as a transaction of less than £5 while Visa defines it as a transaction under 20 Australian dollars.
History
The term was coined by Ted Nelson long before the invention of the World Wide Web. Initially, this was conceived to pay the various copyright holders of a compound work. Micropayments, on the Web, were initially devised as a way of allowing the sale of online content and as a way to pay for very low-cost network services. They were envisioned to involve small fractions of a cent, as little as US$0.0001 to a few cents. Micropayments would enable people to sell content on the Internet and would be an alternative to advertising revenue. During the late 1990s, there was a movement to create microtransaction standards, 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. The W3C has since stopped its efforts in this area, and micropayments have not become a widely used method of selling content over the Internet.
Early research and systems
Established companies such as IBM and Compaq had microtransaction divisions in the late 1990s. Research on micropayments and micropayment standards was performed at Carnegie Mellon and by the World Wide Web Consortium.
IBM Micro Payments
IBM's Micro Payments was established c. 1999, 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".
iPIN
An early attempt at making micropayments work, iPIN was a 1998 venture-capital-funded startup that provided services that allowed purchasers to add incremental micropayment charges to their existing bill for Internet services. Debuting in 1999, its service was never widely adopted.
Millicent
Millicent, originally a project of Digital Equipment Corporation, was a micropayment system to support transactions from as small as 1/10 of a cent up to $5.00. It grew out of The Millicent Protocol for Inexpensive Electronic Commerce, which was presented at the 1995 World Wide Web Conference in Boston, but the project became associated with Compaq after that company purchased Digital Equipment Corporation. The payment system employed symmetric cryptography.
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. It featured pre-paid accounts from which micropayment charges could be drawn. NetBill was initially absorbed by CyberCash in 1997 and ultimately taken over by PayPal.
Online gaming
The term micropayment or microtransaction is sometimes attributed to the sale of virtual goods in online games, most commonly involving an in-game currency or service bought with real-world money and only available within the online game.
Recent systems
Current systems either allow many micropayments but charge the user's phone bill one lump sum or use funded wallets.
Dropp
Dropp is a micropayments platform that allows consumers and merchants to make and accept payments as low as $0.01 for physical or digital goods and services. Dropp accepts both FIAT and cryptocurrencies: the US dollar, AED, HBAR, and USDC. Dropp's platform is designed to provide a Pay-Per-Use alternative to flat fee paid subscriptions as a solution to consumer subscription fatigue. Dropp provides an alternative monetization model to digital merchants while maintaining complete privacy for consumer transactions. Dropp's fee is 5 cents for a $1 transaction, with an average fee of 1% + 25 cents on all transactions above $5. Dropp is currently supported on mobile and web browsers and has Shopify and WordPress user plugins for accepting micropayments.
Flattr
Flattr is a micropayment system (specifically, a microdonation system) launched in August 2010. Actual bank transactions and overhead costs are involved only in funds withdrawn from the recipient's accounts.
Wikipedia contributors · Micropayment · revision 1378535700 · CC BY-SA 4.0 · Plain text extracted and formatting adapted; tags derived from linked topics.