PayPal to Reinvent Micropayments

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PayPal's entire existence is based around making it easy and secure to pay for stuff online, though recently its made a few forays into novel person-to-person payments with smartphone software like Bump. The company's president, has also just revealed a different plan to expand PayPal's online influence: By making micropayments simpler.

Micropayments are a booming phenomenon for all sorts of reasons—most likely you may have encountered the notion in terms of paying for in-game addons in Facebook or on Sony's Playstation Network, but they're used for all sorts of different things. The one issue most micropayment systems have in common though is that you typically can't make a single micro-sized payment as credit card fees preclude any sense in plopping down a one-off $0.79 for an extra in-game gizmo. What you've typically had to do is purchase a chunk of virtual cash, stored as credits, then spend that down as individual micropayments from then on.

Hence PayPal's intention to reinvent the whole game, by turning this system on its head. Instead of having to pay up-front, PayPal's micropayment system will instead store up individual payments until they reach a certain value that makes sense to run through a credit card processing cycle. The upshot: Instead of a dozen $0.49 events, you'll get billed for a single bulk of cash, which makes more financial sense to the vendor, and makes it easier for you to track how many payments you're making.

Now if they could only get rid of those pesky verification and customer service problems taken care of....

Coins image via xJasonRogersx.

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2 Comments

  • Yacko

    And what are they going to charge for a $6-10 loan everyday until it is time to bill a card? Will this skirt state and fed usury rates through an innovative method of applying a fee that avoids an annual interest rate equivalent? The chit I buy upfront earns nothing but with current rates that's no problem. No, what they need to do is lose the major credit companies and institute a real payment system that can make both normal payments and micropayments at a penny or two a transaction. Then we have real change. They also need to stop asking for a bank account number when a debit card or similar is sufficient to fund a paypal account and stop cutting off customers from using paypal after some arbitrary amount has been spent, if said account number is not supplied.