micropayment

There are a number of different definitions of what constitutes a micropayment. PayPal defines a micropayment as a transaction of less than £5{{Cite web|title = Get Paid Small Amounts Online with Micropayments|url = https://www.paypal.com/uk/webapps/mpp/micropayments|website = www.paypal.com|access-date = 12 July 2015}} while Visa defines it as a transaction under 20 Australian dollars.{{cite web | archive-url = https://web.archive.org/web/20110706110908/https://www.payclick.com.au/getattachment/e693f4a2-3e0b-4811-841e-5c43ef5aa19b/payclick-Press-Release-24-June-2010.aspx | archive-date = 6 July 2011 | url = https://www.payclick.com.au/getattachment/e693f4a2-3e0b-4811-841e-5c43ef5aa19b/payclick-Press-Release-24-June-2010.aspx | title = Visa launches new way to pay online | website = payclick.com.au | date = 24 June 2010 }}{{verify source|date=July 2015}}

The term was coined by Ted Nelson,{{cite news|title=The Babbage of the web|url=http://www.economist.com/node/442985|access-date=13 November 2017}} long before the invention of the World Wide Web. Initially, this was conceived as a way to pay the various copyright holders of a compound work.{{cite web|last1=Nelson|first1=Ted|title=A THOUGHT FOR YOUR PENNIES: MICROPAYMENT AND THE LIBERATION OF CONTENT|url=http://transcopyright.org/hcoinRemarks-D28.html|access-date=13 November 2017|url-status=usurped|archive-url=https://web.archive.org/web/20171113165908/http://transcopyright.org/hcoinRemarks-D28.html|archive-date=13 November 2017}} 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.{{cite CiteSeerX | last1 = Hardy | first1 = Norm | last2 = Tribble | first2 = Dean|title=The Digital Silk Road|citeseerx = 10.1.1.53.6972|date=1993}} They were envisioned to involve small fractions of a cent, as little as US$0.0001{{cite book|author=Theerasak Thanasankit|title=E-commerce and Cultural Values|url=https://books.google.com/books?id=blYKtUbhR1MC&q=micropayment+defined+cent&pg=PA225|date=2003|isbn=9781591400561}} to a few cents.{{cite web | url = https://www.wired.com/science/discoveries/news/1999/11/32092 | title = Toward a Click-and-Pay Standard | website = wired.com | date = 11 March 1999 }} Micropayments would enable people to sell content on the Internet and would be an alternative to advertising revenue.{{cite web | url = http://www.w3.org/TR/Micropayment-Markup/#origin-goals | title = Common Markup for micropayment per-fee-links 1.1 Origin and Goals | work = W3C Working Draft | date = 25 August 1999 }}

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.{{cite web | url = http://www.w3.org/ECommerce/Micropayments/ | title = Micropayments Overview | website = w3c.com }} 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.

In the late 1990s, established companies such as IBM and Compaq had microtransaction divisions, and research on micropayments and micropayment standards was performed at Carnegie Mellon and by the World Wide Web Consortium.

IBM's Micro Payments was established {{circa|1999}},{{cite web|url=http://www.hrl.il.ibm.com/mpay |title=Archives of IBM Micro Payment sites |url-status=dead |archive-url=https://web.archive.org/web/19990203132612/http://www.hrl.il.ibm.com/mpay/ |archive-date=3 February 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".{{cite web|archive-url=https://web.archive.org/web/20000830082507/http://www-4.ibm.com/software/webservers/commerce/payment/mpay/ |archive-date=30 August 2000 |url=http://www-4.ibm.com/software/webservers/commerce/payment/mpay/ |title=IBM Micro Payments |url-status=dead }}

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.{{cite web|last=Johnson|first=Amy Hellen|title=iPIN|url=http://www.computerworld.com/s/article/44837/iPIN|work=ComputerWorld.com|date=15 May 2000|publisher=ComputerWorld|access-date=4 January 2012}} Debuting in 1999, its service was never widely adopted.

Millicent, originally a project of Digital Equipment Corporation, was a micropayment system that was to support transactions from as small as 1/10 of a cent up to $5.00.{{cite web | archive-url = https://archive.today/19970601153143/http://www.millicent.digital.com/ | archive-date = 1 June 1997 | url = http://www.millicent.digital.com/ | title = Millicent }} It grew out of The Millicent Protocol for Inexpensive Electronic Commerce, which was presented at the 1995 World Wide Web Conference in Boston,{{cite web|archive-url=https://archive.today/19970707014236/http://www.millicent.digital.com/html/whatsnew.html |archive-date=7 July 1997 |url=http://www.millicent.digital.com/html/whatsnew.html |work=Millicent |title=What's New |date=June 1997 |url-status=dead }} but the project became associated with Compaq after that company purchased Digital Equipment Corporation.{{cite web | url = http://news.cnet.com/Compaq-to-license-digital-cash-technology/2100-1017_3-219482.html | title = Compaq to license digital cash technology | website = cnet.com | date = 23 December 1998 }} The payment system employed symmetric cryptography.{{cite web | url = http://www.ietf.org/proceedings/46/46th-99nov-ietf-129.html | title = 2.6.10 Micro Payments (micropay) bof Current Meeting Report | date = 8 November 1999 | publisher = Internet Engineering Task Force | website = ietf.org }}

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.{{cite web | archive-url = https://web.archive.org/web/19970613041513/http://www.ini.cmu.edu/netbill/ | archive-date = 13 June 1997 | url = http://www.ini.cmu.edu/netbill/ | title = The NetBill Project }} It featured pre-paid accounts from which micropayment charges could be drawn.{{cite web|archive-url=https://web.archive.org/web/20021009224400/http://www.netbill.com/netbill/about.html |archive-date=9 October 2002 |url=http://www.netbill.com/netbill/about.html |title=About NetBill |url-status=dead }} NetBill was initially absorbed by CyberCash in 1997 and ultimately taken over by PayPal.{{cite web|title=CyberCash press release |url=http://www.netbill.com/netbill/press_release.html |access-date=12 January 2015 |url-status=unfit |archive-url=https://web.archive.org/web/19970611050302/http://www.netbill.com/netbill/press_release.html |archive-date=11 June 1997 }}

{{main|Microtransaction|Virtual economy|Free-to-play|Downloadable content}}

The term micropayment or microtransaction is sometimes attributed to the sale of virtual goods in online games, most commonly{{Citation needed|date=July 2018}} involving an in-game currency or service bought with real world money and only available within the online game.

Current systems either allow many micropayments but charge the user's phone bill one lump sum or use funded wallets.

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.{{cite web|url=https://dropp.cc|title=Dropp Micropayments|website=dropp.cc|access-date=28 July 2021}} 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.

{{Main|Flattr}}

Flattr is a micropayment system (more specifically, a microdonation system) which launched in August 2010.{{cite news|url=https://techcrunch.com/2010/08/12/flattr-opens-to-the-public-now-anybody-can-like-a-site-with-real-money/|title=Flattr opens to the public, now anybody can 'Like' a site with real money|first=Steve|last=O'Hear|work=TechCrunch Europe|date=12 August 2010|access-date=13 August 2010}} Actual bank transactions and overhead costs are involved only on funds withdrawn from the recipient's accounts.

Jamatto is a micropayments and microsubscriptions system that allows websites and publishers to accept payments as small as 1¢ by modifying just their HTML source code{{cite web|url=https://jamatto.com/#/BusinessCode|title=Jamatto Micropayments|website=jamatto.com|access-date=1 December 2017}} Jamatto is in use by newspapers across three continents.

A service provided by TIMWE, M-Coin allows users to make micropayments on the Internet. The user's phone bill is then charged by the mobile network operator.{{cite web |url=http://mobilemarketingmagazine.com/content/timwe-launches-m-coin-brand-0 |title=MCoin Product Lines – Mobile Marketing magazine |publisher=Mobile Marketing Magazine |date=30 June 2011 |access-date=2 July 2011 |url-status=dead |archive-url=https://web.archive.org/web/20110724175433/http://mobilemarketingmagazine.com/content/timwe-launches-m-coin-brand-0 |archive-date=24 July 2011 }}

PayPal MicroPayments is a micropayment system that charges payments to user's PayPal account and allows transactions of less than US$12 to take place.{{cite web | url=https://techcrunch.com/2010/10/26/paypal-unveils-micropayments-for-digital-goods-facebook-signs-up/ | title=PayPal Unveils Micropayments For Digital Goods, Facebook Signs Up | publisher=AOL | work=techcrunch.com | date=26 October 2010 | access-date=23 November 2012 | last = Rao | first = Leena}} As of 2013, the service is offered in selected currencies only.{{cite web | url=http://www.paypalobjects.com/IntegrationCenter/ic_micropayments.html | title=Micropayments | publisher=PayPal | work=PayPal Integration Center | access-date=23 November 2012}} The PayPal charge for a micropayment from a U.S. account is a flat five cents per transaction plus five percent of the transaction (as compared with PayPal's normal 2.9% and 30 cents for larger sums).[https://www.thebalancesmb.com/increase-profits-with-paypal-micropayments-1140571 Article on Micropayments]

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Swish is a payment system between bank accounts in Sweden. It is designed for small instant transactions between people, instead of using cash (cash has largely dropped in use in Sweden since 2010), but is also used by small businesses such as sports clubs that don't want to deal with the cost of a credit card reader. A cell phone number is used as a unique user identifier, and must have been registered at a Swedish bank. A smartphone app is used to send money, but any cell phone can be used as a receiver.

The lowest permitted payment is 1 SEK (around 0.09 EUR) and the highest is 10,000 (around 950 EUR), although 150,000 SEK can be transferred if the transaction is preregistered in the internet bank. The fee is generally zero for private people, but when the receiver is an organisation e.g. sports club or company, there is fee of 2 SEK.

Similar apps with zero fee for small instant private transactions, Vipps and MobilePay have become popular in Norway and Denmark.

Tikkie is a Dutch payment system in the Netherlands, Belgium and Germany, run by the ABN AMRO bank. It is available to anyone with a Dutch bank account and a Dutch, Belgian or German phone number. It was originally marketed as a way to share costs between friends, e.g. when sharing a ride or at a restaurant or buying movie tickets, but there is now also a business variant for e.g. paying toll fees or congestion charges, and a restaurant variant whereby the restaurant sends payment requests to the individual people at the table. Tikkie is free for private transactions (even for users of other banks, since Dutch banks typically charge annual banking fees instead of per-transaction fees), but there is a transaction cost for business clients.{{Cite web|url=https://www.tikkie.me/bedrijven/veelgestelde-vragen|title=Tikkie}}

A Tikkie payment request consists of a generated hyperlink (which may be encoded as a QR code) that redirects to the iDeal payment system which is used by most banks in the Netherlands. If the payer has a banking app for any Dutch bank on his mobile device, the Tikkie link can open the banking app directly. Alternatively, the payment can be made in a web browser. Payment requests are generated by an Apple or Android mobile app and payment requests are typically sent via messaging systems like WhatsApp or Telegram.

In 2017 there were 1 million users and 150 000 payment requests per week. By 2018, Tikkie reported 2 million users and 440 000 payment requests per week. By 2019, there were about 5 million users, with 200 000 payment requests per day. 50% of Tikkie payment requests are honoured within 1 hour, and 80% are paid within 24 hours.{{Cite web|url=https://tweakers.net/nieuws/151480/nederlanders-betalen-bijna-200000-tikkies-per-dag.html|title = Nederlanders betalen bijna 200.000 Tikkies per dag}} In 2017, the average payment request was EUR 12.{{Cite web|url=https://www.rtlnieuws.nl/tech/artikel/13021/waarom-gratis-betaal-app-tikkie-zo-waardevol-voor-abn|title = Waarom gratis betaal-app Tikkie zo waardevol is voor ABN|date = 8 March 2017}} By 2018, the average payment request was EUR 27.50. A sender may send no more than EUR 750 and a recipient may receive no more than EUR 2500 per Tikkie.{{Cite web|url=https://www.consumentenbond.nl/betaalrekening/tikkie|title = Tikkie: Hoe werkt het? | Consumentenbond}}

{{Main|Blendle}}

Blendle is an online news platform that aggregates articles from a variety of newspapers and magazines and sells them on a pay-per-article basis, leading Nieman Lab to describe it as a "micropayments-for-news pioneer".{{Cite web|url=https://www.niemanlab.org/2019/06/micropayments-for-news-pioneer-blendle-is-pivoting-from-micropayments/|title=Micropayments-for-news pioneer Blendle is pivoting from micropayments|last=Schmidt|first=Christine|date=10 June 2019|website=Nieman Lab|access-date=11 June 2019}} It operates in the Netherlands, Germany and the US. In 2019, five years after its launch, it announced that it would change its business model away from micropayments to premium subscriptions. Nieman Lab commented that "micropayments keep not panning out".

Zong mobile payments was a micropayment system that charged payments to users' mobile phone bills. The company was acquired by eBay and integrated with PayPal in 2011.{{cite news|url=https://blogs.wsj.com/venturecapital/2011/07/07/ebays-zong-deal-mobile-payments-are-all-fun-games/|title=EBay's Zong Deal: Mobile Payments Are All Fun & Games|last=McMahan|first=Ty|date=7 July 2011|publisher=WSJ Blogs: Venture Capital Dispatch}}

{{reflist}}

• [http://www.w3.org/TR/Micropayment-Markup W3C Micropayment Working Group]
• {{cite web | url = http://wwwhome.cs.utwente.nl/~pras/publications/2005-I3E-2ndgeneration-payments.pdf | title = Second generation micropayment systems: lessons learned | first = Robert | last = Parhonyi | access-date = 28 March 2010 | archive-url = https://web.archive.org/web/20170809115618/http://wwwhome.cs.utwente.nl/~pras/publications/2005-I3E-2ndgeneration-payments.pdf | archive-date = 9 August 2017 | url-status = dead }}