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I'm not optimistic that this platform will ever exist in the West. Micropayments is effectively blocked by the credit card industry with their high fees and a w

I'm not optimistic that this platform will ever exist in the West. Micropayments is effectively blocked by the credit card industry with their high fees and a widely used micropayments platform would essentially disrupt the credit card industry - why would anyone pay Visa 1.9% if the new platform was sending payments for a fraction of a cent? And any player large enough (e.g. Apple) to deploy such a platform would rather not piss off Visa. In China, where credit cards never existed, they already have a micropayments infrastructure. Sending payments is massively cheaper there and some businesses there, such as Podcasts are way more successful due to this model. Some podcasting subscriptions are sold for 1 yuan (15 cents)[1]. As long as Visa/Mastercard exists, I don't think we will see this come to the US. I wouldn't hold out for crypto either - it's not a technical problem. The technology has existed to make this reality for years. [1] https://www.wsj.com/articles/chinese-show-willingness-to-pay-for-clicks-1483555104 https://www.wsj.com/articles/chinese-show-willingness-to-pay...

AndrewKemendo 8y ago
What's stopping an online bank from setting up their own system?
- rchaud 8y ago
  Comparative advantage. The amount banks could earn on their traditional products and services dwarfs whatever pennies they'd scrounge up by creating a B2C Patreon replacement.
setr 8y ago
I never understood credit card fees interaction with small transactions (eg shops with $10 min); if its a perfentage fee, what does it matter how small the individual transaction is? Total revenue is hit by it all the same A billion from micropayments and a billion from one payment should be equivalent..?
- Bartweiss 8y ago
  You're right about the general case; a restaurant running two $50 payments or one $100 payment usually won't see any difference. But a thousand $1 micropayments produce more overhead (and more risk) than one $1000 payment, so below some threshold it's not worth handling them. As a result, most card processors have rules to either block that payment pattern or raise costs on it. Common approaches include: - Caps on monthly transaction counts - Caps on monthly payment amounts, with usage monthly fees - Flat costs added to percentage fees - Percentage fees with a minimum charge Similarly businesses which know they'll see numerous small payments mostly just charge enormously high fees. The Apple Store and Google Play both take 30% transaction costs, and I suspect they pay their processors noticeably more than the common ~%2 rate despite their size.
- runako 8y ago
  Credit card transactions typically have a percentage component and a fixed-fee "swipe" component. So on a $10 charge, the vendor might pay 2.9% ($0.29) plus a $0.30 swipe fee. Crucially, the swipe fee is the same if the transaction is $10, $1,000, or $1. Micropayments are hard to make work on top of this infrastructure because the payment network eats up 60% of a $1 transaction and nearly all of a $.50 transaction.
Bartweiss 8y ago
This is certainly a problem, but I think examples like video game microtransactions and HQ Trivia payouts prove it's not unsolvable. $1 transactions at a 30% cut sound harsh, but are clearly capable of supporting companies. Or, if a trusted intermediary is available, micropayments can be batched into a few larger charges. This is definitely harder if you're going to leave money with consumers, who can cancel before a batched payment with little downside. But it could probably be managed, or people could be persuaded to pay a larger sum into a clearinghouse in advance. The easiest approach might be to partner such a service with an existing alternate payment processor. Lots of people are already content to leave a few lunches worth of money in Venmo, which would both reduce payment fees and streamline the mental effort of buying articles. And cynically, an auto-refill setup would also reduce people's awareness of how much they were paying. There are still major hurdles for this model - do you serve content and then hope you get paid? Do you offer refunds on articles people dislike? But I think the actual transactions can be managed, and I think the clearinghouse model could potentially resolve a lot of the other issues besides. As a quick example: 'refunds' for bad articles become vastly easier when haven't paid a transaction fee and can blacklist people who abuse the mechanic.

AndrewKemendo 8y ago

What's stopping an online bank from setting up their own system?

rchaud 8y ago
Comparative advantage. The amount banks could earn on their traditional products and services dwarfs whatever pennies they'd scrounge up by creating a B2C Patreon replacement.

setr 8y ago

I never understood credit card fees interaction with small transactions (eg shops with $10 min); if its a perfentage fee, what does it matter how small the individual transaction is? Total revenue is hit by it all the same A billion from micropayments and a billion from one payment should be equivalent..?

Bartweiss 8y ago
You're right about the general case; a restaurant running two $50 payments or one $100 payment usually won't see any difference. But a thousand $1 micropayments produce more overhead (and more risk) than one $1000 payment, so below some threshold it's not worth handling them. As a result, most card processors have rules to either block that payment pattern or raise costs on it. Common approaches include: - Caps on monthly transaction counts - Caps on monthly payment amounts, with usage monthly fees - Flat costs added to percentage fees - Percentage fees with a minimum charge Similarly businesses which know they'll see numerous small payments mostly just charge enormously high fees. The Apple Store and Google Play both take 30% transaction costs, and I suspect they pay their processors noticeably more than the common ~%2 rate despite their size.
runako 8y ago
Credit card transactions typically have a percentage component and a fixed-fee "swipe" component. So on a $10 charge, the vendor might pay 2.9% ($0.29) plus a $0.30 swipe fee. Crucially, the swipe fee is the same if the transaction is $10, $1,000, or $1. Micropayments are hard to make work on top of this infrastructure because the payment network eats up 60% of a $1 transaction and nearly all of a $.50 transaction.

Bartweiss 8y ago

This is certainly a problem, but I think examples like video game microtransactions and HQ Trivia payouts prove it's not unsolvable. $1 transactions at a 30% cut sound harsh, but are clearly capable of supporting companies. Or, if a trusted intermediary is available, micropayments can be batched into a few larger charges. This is definitely harder if you're going to leave money with consumers, who can cancel before a batched payment with little downside. But it could probably be managed, or people could be persuaded to pay a larger sum into a clearinghouse in advance. The easiest approach might be to partner such a service with an existing alternate payment processor. Lots of people are already content to leave a few lunches worth of money in Venmo, which would both reduce payment fees and streamline the mental effort of buying articles. And cynically, an auto-refill setup would also reduce people's awareness of how much they were paying. There are still major hurdles for this model - do you serve content and then hope you get paid? Do you offer refunds on articles people dislike? But I think the actual transactions can be managed, and I think the clearinghouse model could potentially resolve a lot of the other issues besides. As a quick example: 'refunds' for bad articles become vastly easier when haven't paid a transaction fee and can blacklist people who abuse the mechanic.