PayPal to Offer Micropayments

lazarus corporation writes "According to a press release on shareholder.com, PayPal are introducing micropayments processing fees for digital goods. Will this allow musicians to do away with record companies completely and successfully sell their own music online?" It looks geared to be the under $2 area and not the couple of pennies area, so I think calling it "Micropayments" is a bit much, but it's something. Still amazing that in 2005 nobody has figured out a way to make it simple to charge a penny on-line.

Comments

Transaction Costs

[Oculus Habent]

Still amazing that in 2005 nobody has figured out a way to make it simple to charge a penny on-line.

The cost is in the partnering. Even if you can get the user to put in money in large blocks that don't kill you in financial transaction fees ($20+ is my guess) instead of being charged a few cents a day/week, you have the transaction overhead of whatever unique system each site uses (per page, per article, per section, per day, any of these with caps...), subtracting the fees from each user, aggregating the total payment to each site and providing statements to all.

The key to the micropayment game is aggregation of volume . If your company is processing 2000 payments per day of $0.01 each from 2000 different people, it's probably costing you more than it's worth. However, if you're processing five million payments a week with an average individual's cost being around $0.25, you might be breaking even. If you could get two dozen major sites and hundreds of smaller ones on board, you might make money.

Either the financial costs (actually taking and distributing money) need to be reduced, or the number of transactions per person/site need to go way up. I don't see banks and credit card companies giving out money for cheaper, so, here's the hard question: How do you get widespread buy-in on a system that only works once it has widespread buy-in? Who's the philanthropist who will fund a losing game for as long as it takes to become profitable?

Hey, maybe the government is interested! They own the money, anyway...

Re:Transaction Costs

[the_unknown_soldier]

But this is the beauty of pay pal. When paypal transfer money from one account to another the money is still just sitting in Pay Pal's account. So users Put in $20 for micropayments, it gets moved to 20 different accounts, and each of those accounts gets 20 micropayments. Apart from raw database management costs which are minimal, this is going to cost Pay Pal the same.

Re:Transaction Costs

[Oculus Habent]

How long do you think the sites will leave their money sitting on PayPal, though?

I understand that PayPal's solution is quite different from Slashdot's solution; PayPal is banking on $0.50-$2.00 - type transactions and Slashdot is a penny a page. The latter style (CmdrTaco's comment) is what I was talking about.

PayPal may be uniquely positioned to provide such a service, as they already provide some aspects of the needed technology.

As Taco mentioned, though, the real test of "micropayments" is not under $2.00, but rather under $0.10. The markets are likely quite different though. This 5% plus 5 cents could work for a variety of small transactions.

Re:Transaction Costs

[AviLazar]

Let's not forget things as fee's. When you use your Credit card to pay PayPal there is a merchant charge. This charge varies but it can (easily) be around 1.25 + 1% of sales. This is paid by the merchant, not the client. So if you are buying something for 1 cent, even 25 cent's, the merchant is not only not making money, he is losing money!

Now a company like PayPal probably has a pretty good system in place, where their credit card charge is less then mom-n-pop merchant - but they still have costs

It's not that we can't do micropayments, it's just that it is not cost effective.

Re:Transaction Costs

[andsand]

The bank makes money on a few other things other than just fee. It keeps the money and kan lend it to someonelse for a profit while you have the money stored in the bank doing nothing. That how it is done.

An online system cash system will be introduced in 2006, where you could transfer funds from phone-to-phone, computer-to-phone or to your account. It is done but it needs the right marketing and deals with financial insitutions for this not to be a flop, and those deals takes months to get right. Just keep your connection alive, and we'll show you...

Re:Transaction Costs

[l0b0]

How about credit-based payment? You pay for X items (or $X) whenever you are out of credit, and can at any time say that you want the rest back on your account. Due to the amount of users who don't bother reclaiming their 2 cents (literally), and the extra buying because "credit is free", there shouldn't be any need for fees for reclaiming.

Re:Transaction Costs

[atomic noodle]

'Who's the philanthropist who will fund a losing game for as long as it takes to become profitable?'

Those people are called 'investors', not 'philanthropists'. And there are lots of them around.

Otherwise, I agree with you completely. I just wanted to correct that one point.

Re:Transaction Costs

[frisket]

Still amazing that in 2005 nobody has figured out a way to make it simple to charge a penny on-line.

But they have: just do it. It's the bean-counters who are holding it back, insisting that the cost of processing the transaction be counted against the transaction, instead of as an overhead. How many businesses count the x" of Tally roll against each transaction?

If your company is processing 2000 payments per day of $0.01 each from 2000 different people, it's probably costing you more than it's worth.

Only if all your products are priced at $0.01. If you have a wide enough price span, you can subsume the per-transaction cost as an overhead. And if the site and the products are sufficiently attractive, today's $0.01 purchaser may become tomorrow's $500 purchaser.

America has simply forgotten how to do business.

Re:Transaction Costs

[Mateo_LeFou]

Also remember the mental transaction costs

Re:Transaction Costs

[scottennis]

I was just about to say "the government".

You are a legitimate phenomenon!

Re:Transaction Costs

[Lumpy]

The problem is that paypal needed to pull their heads out of their arse years ago on this.

if coke machines were paypal enabled and other vending, mc-donalds, etc they would have dominated the market almost overnight.

they dropped the ball in their constant attempt to keep from being labelled as a bank. something that will catch up with them eventually.

it blows my mind how fragmented the financial world is. nobody wants to play ball with anyone else and there is a giant "MINE MINE MINE" mentality going in the biz that it's killing the giant possibilities of profits out there.

a paypal smartcard credit card could have give them an edge over even the biggest financial companies on this planet. theyt could have became the next financial giant dealing with the micropayments of $1.00+ from vending and other automated devices that everyone uses daily.

now it's too late. Most universities have their own system in place and will certianly not let paypal in the game. online music purchases are nothing compared to the amount of cash spent in vending on a campus each day by students and faculty.

Re:Transaction Costs

[gfreeman]

I think the point that was being made was that it should be insignificant to PayPal to move data around internally. The charges you mention will only be brought into play when cash is withdrawn from the merchants' accounts. Moving pennies from one account to another should be free, given that commissions are paid upon withdrawal.

With credit cards, there's no "float" - all payments go in and are paid back to the merchant minus commissions. (I am assuming that's true, please correct me if you know different).

I agree with the OP - it's surprising that in 2005 there's no real micropayment infrastructure in place.

Re:Transaction Costs

[Oculus Habent]

I almost used the term venture capitalists, but thought better (worse?) of it. There's a very real possibility that the ROI for a project like this is long. One could be pouring money into this for years until you hit break even. It could work faster, if you could get widespread adoption, but there are no guarantees.

It's as possible as not that you will run into a competitor in the field, and spend months - even years - fighting for supremacy or in talks for interoperability or buyout.

This is an "infrastructure" kind of technology. Like many of these, there is no guarantee that anyone will make money until the infrastucture is truly in place. Once it's a sure thing, VCs and investors will hop on board. Until then, I think we're looking for philanthropists.

Re:Transaction Costs

[AviLazar]

Floats almost always happen (with the exception of Wire Transfers, which usually cost 10-50$/transfer). Also, if the merchant doesn't settle their credit machine at the end of the night this delays the transaction (in this case floating to the advantage of the customer). I doubt a place like PayPal, or even any online retailer who only accepts credit cards, would do this. It still takes time, however, and companies float. Some banks have deals with each other and they minimize floating periods, but it is still there (even if just for a day, or even half a day). Remember, in terms of millions and billions, half a day of floating is still a lot of money.

But yes, I think micropayments should be in palce, but how cheap do we go. Someone mentioned that you have a prepayment account. So you stick $20 on your PayPal account. When you make a purchase you use money from that account, so you do not get hit with inter-banking fee's (i.e. ATM fee's). While this would be a good method, it would mean the client gets a HEAVY float penalty. Your $20 sits there for days, weeks, months, years! It's a good option, but many would scream bloody murder for their $20 worth of interest.

Can this be done electronically - yes, the technology is already here. But banks are old school and are greedy. Put it this way, my friend works for a company that knows how much it costs banks for ATM charges (from one bank to another)...it's about 4 cents (as of a couple of years ago). But bank's charge about $2 from the foreign bank, and probably around $1 on your banks end (assuming you do not have a special account). So you suffer a $3 charge for a 4 cent transaction. Talk about price gouging.

Re:Transaction Costs

[CProgrammer98]

You have been especially selected for our FREE Apostrophe 101 course.

We recommend that you pay particular attention to module 3...

It's "fees", not "fee's" and "cents" not "cent's". Although you managed to work out how to pluralise "thing", "sale" and "cost" and even "micropayment" correctly.

4 out of 6 plurals correct... Well done, but do try harder next time... :)

Re:Transaction Costs

[gfreeman]

Thanks for clearing that up. I wasn't sure.

I can't see too many people wanting interest on $20. The interest on $20 in your current/checking account is marginal, and that's if your bank gives you interest on your non-savings $$$. Because, as you say, banks are greedy. I wouldn't expect my $20 to get interest. Heck, I'd be ahead if I wasn't charged to use the service.

Ongoing charges should be made where the big money is - the vendors, not the customers. Charge the customers and you'll run out of customers real quick. Offer another method of payment to the vendors, and if it works for them, it'll stick around. Economics of this should be done between the infrastructure providers and the merchants, not the people ponying up $20 a piece.

Re:Transaction Costs

[Anonymous Coward]

Someone please take that man's apostrophe key away!

Re:Transaction Costs

[llamashoes]

I have a hard time with post's like this.

Re:Transaction Costs

[ndtechnologies]

Maybe instead of a band using paypal to help sell their music (where Paypal will get a significant chunk of the sale), maybe the bands should go to a site like Independent Music Online http://ind-music.com/ where the bands can make more money. This site has a payment plan set up that helps the bands earn more money, if more songs are purchased...check it out.

Re:Transaction Costs

[KingKire64]

Just dont use apostrafee's at all its easier to play dumb, and I'd say playing dumb is better than looking dumb.

Re:Transaction Costs

[LaCosaNostradamus]

So, what, PayPal should have overextended itself with growth so that it would have ended up just another crashed dotcom?

Get over yourself. PayPal is THE online payment system. Making yourself a market leader is nothing to criticize. (Now, their business ethics -- THOSE are things to criticize.)

There's still plenty of margin for PayPal to low-bid their way into a lot of common commerce -- however established -- as long as they are willing to outsource and offshore in order to trim costs within razor-thin margins. Again, considering PayPal's business ethics, this seems all too likely.

Re:Transaction Costs

[EERac]

Ron Rivest and Silvio Micali have looked closely at micropayments, and are even involved with a startup named Peppercoin.

It's been a while since I heard Professor Rivest (of RSA fame) speak, but part of his solution was to aggregate payments across customers. In his talk he explained how buyers could be given electronic money, only a fraction of which was actually valuable to a particular vendor. Suppose 9 out of 10 "e-dimes" would not be redeemed, but the 10th entitled the vendor to a dollar from the credit card company. The vendor would break even on average, but if they could test the money themselves, would use far fewer transactions.

Making the whole system secure relies on a bunch of cryptography. Specifically, it's important to not be able to forge money, not be able to test a bunch of money to see if it's valuable to a vendor, and not be able to give the same money to multiple vendors.

I imagine the Peppercorn is currently proposing a simpler solution that integrates better with existing technology. Either way, when a payments are sufficiently large, the system could just defer to current technology, so the vendor is no worse off.

Re:Transaction Costs

[JVert]

How long do you think the sites will leave their money sitting on PayPal, though?


The same amount of time as they did when they were selling $30 items on ebay.

Actually less so, I bet there will be more $8 accounts out there then before. Which is handy, if they never come back to get it.

Re:Transaction Costs

[MikeFM]

I just let users buy credits (that can be used on any site supporting my system) and let users transfer credits from that pool. When they run out then they can't access any of the using sites without buying more credits. *shrugs* Seems easy enough. Usually sites charge about $.01/Kb. Dunno if I could make the system profitable for me as the service provider though. I thought about making it so credits could be used for other stuff though and providing free store/auction sites that only work with credits. Use the micropayments to hook in a client base.

Re:Transaction Costs

[WillWare]

The key to the micropayment game is aggregation of volume.

There is an alternative to this, which is to use probabilistic micropayments. There are a few different probabilistic ideas around, my favorite is of course my own. Suppose that I agree that some piece of content is worth a nickel. I'm not willing to use a 37-cent stamp to send a nickel to the creator of the content, nor are our banks willing to process a check for five cents, but I might be amenable to a fair lottery that gives me one chance in 100 of owing five dollars.

Assuming the customer agrees in principle, the next problem is to arrange a lottery that both vendor and customer agree is fair. Let N be the multiplier (the 100 in the example above) and P be the amount of the check (five bucks, above) so that the agreed-upon value of the content is P/N. Here's my idea for a fair lottery protocol.

1. Customer and vendor agree to terms (including values of P and N).
2. Vendor generates a random 128-bit number R1 and computes its MD5 hash H1. Vendor transmits H1 and content to customer.
3. Customer generates a random 128-bit number R2 and transmits R2 to vendor.
4. Vendor transmits R1 to customer. Customer confirms that MD5 hash of R1 is really H1.
5. Customer and vendor both compute ((R1+R2) % N). If this number is zero, then customer owes amount P to vendor. Otherwise customer gets the content for free.

The guarantee of fairness is that neither vendor nor customer can manipulate the quantity ((R1+R2)%N), because the vendor doesn't know R2 when he generates R1, and the customer doesn't know R1 when he generates R2. The hash value H1 represents the vendor's commitment to the value of R1: it assures the customer that the vendor did not change R1 after learning the value of R2.

Re:Transaction Costs

[klept]

"Who's the philanthropist who will fund a losing game"? Bill Gates. This is also a joke, but not inside.

Re:Transaction Costs

[macdaddy357]

Beauty of paypal? It is high time to stop singing the praises of a bunch of bloodsuckers who fucked up many generous people's attempts to help hurricane victims. Paypal can go to hell and die!

Re:Transaction Costs

[Retric]

FYI Bandwidth costs are about 50c / GB so 0.001$ / MB could still be profitable.

Re:Transaction Costs

[draziw]

Yet somehow Jack-in-the-box, McD, and lots of food places at airports etc. manage to take credit card payments for a order of soda or meal - they are _not_ loosing money on it... I don't even need to open an account with them first, give them my address or even sign anything. - It's faster than cash too.

Re:Transaction Costs

[MikeFM]

Overage bandwidth costs me about US$.50/GB so it's not that much. If I stay within my 1500GB/mo alloted bandwidth then it's only about US$.08/GB for bandwidth including the server. Still I was using more than $50/day in bandwidth before I decided to start charging.

Re:Transaction Costs

[anthony_dipierro]

Remember, in terms of millions and billions, half a day of floating is still a lot of money.

Actually, half a day of floating is almost always either nothing, or equivalent to a day of floating. Interest is charged (to banks, and pretty much universally) on an overnight loan. The account is reconciled once at the end of each business day, credits and debits from any time of the day are all put in at the same time. This is one of the advantages of daytrading. As long as you close your positions by the end of the day, you don't have to pay any margin interest.

So you stick $20 on your PayPal account. [....] Your $20 sits there for days, weeks, months, years!

...earning 3.5% interest. And that assumes you use your Paypal account for nothing else. Personally I run hundreds of dollars through my paypal account every month. I'd barely notice a few pennies here and there. And $20, at 3.5% interest, is...$0.70/year. (3.5% interest happens to be pretty close to the US dollar LIBOR, so you're not going to get much better for a liquid investment which is pretty close to risk-free.

Re:Transaction Costs

[anthony_dipierro]

I just let users buy credits (that can be used on any site supporting my system) and let users transfer credits from that pool.

How many credits do you get for $1.00, 100? Why not just call them pennies?

Re:Transaction Costs

[MikeFM]

Actually you get around 1000 credits for US$1. Pennies aren't small enough for decent micropayments, naming it after real money has possible legal ramifications, I don't want the system tied to US currency as I might want non-US users, and most of all.. cus I just felt like it.

Actually, I don't call them credits. In my system they are called duce's (Digital Universal Currency Entity) with a duck (Digital Universal Currency Kilo) being the amount I'd relate to a euro or a dollar. Not that it really makes any difference what you call them. ;)

Re:Transaction Costs

[dave1212]

Thank God we're starting to speak up about all the terrible grammar posted here.

It's one small thing we can do to help people seem less stupid.

Re:Transaction Costs

[anthony_dipierro]

Actually you get around 1000 credits for US$1. Pennies aren't small enough for decent micropayments

Fine, tenths of a penny, same basic concept.

naming it after real money has possible legal ramifications

Actually, naming it after real money takes the legal ramifications aways. If you're dealing with "credits", then you've gotta worry about being classified as a barter exchange, and required to collect social security numbers and give out 1099-Bs. If you just handle it like money, which you hold in trust in a bailment transaction, then I believe the reporting requirements fall upon the people transferring it.

I don't want the system tied to US currency as I might want non-US users

Heh, so use the Euro :). I'm in the US, and I'd have no problem keeping a small Euro-denominated account to pay people in Euros. Of course, you could go the e-gold way and use gold for the currency.

With credits though, it sounds too much like you're trying to avoid taxation, and the government isn't going to like that.

Re:Transaction Costs

[AviLazar]

Actually their profit margins are a lot less and may even be at a loss when you buy something like that. Big name places can afford to take the small hits. Also big name places have better merchant carrier deals then other places. Merchant services gives special deals to large volume clients - and McD and Jack-in-the-box are considered large volume.

As for faster then cash. I am pretty sure giving $1 is faster then running a credit card. Yea, as a person who worked in banking for almost five years I can pretty much expertly tell you that it is.

Re:Transaction Costs

[AviLazar]

Actually, half a day of floating is almost always either nothing, or equivalent to a day of floating. Interest is charged (to banks, and pretty much universally) on an overnight loan. The account is reconciled once at the end of each business day, credits and debits from any time of the day are all put in at the same time. This is one of the advantages of daytrading. As long as you close your positions by the end of the day, you don't have to pay any margin interest.
Hmm, I did not know this. I thought that if I bought a stock now, it went up in X amount of dollars/share in 10 minutes, and then I sold it I would earn money. So partial day interest would make sense to me (on a large scale). Well I assume you are correct (yea I know a terrible thing to do) so I learned something new.

...earning 3.5% interest. And that assumes you use your Paypal account for nothing else. Personally I run hundreds of dollars through my paypal account every month. I'd barely notice a few pennies here and there. And $20, at 3.5% interest, is...$0.70/year. (3.5% interest happens to be pretty close to the US dollar LIBOR, so you're not going to get much better for a liquid investment which is pretty close to risk-free.

People will quibble about the smallest thing. In my early days in the banking industry, I had a customer come in and flip out over a 25 cent difference from his checkbook to the banks statements. He cancelled his doctors appointment, and drove into the city (where parking is a premium and costly) to argue this. People flip out. Also, 20 is on the low end. We are thinking of a min to open the account.

Re:Transaction Costs

[MikeFM]

Euros and Dollars are the same basic concept. That doesn't make them identical in principal or practice. DUC is just my personal retake of digital currency.

They may as well tax us for /. karma. ;)

*shrugs* Any way around it I will refuse to cooperate with any sort of taxation bullshit. I doubt for my tiny system it'll ever be an issue but if it was I'd not be willing to pay the damn government one damn cent. If the system became successful enough for it to matter then I'd move everything off-shore (myself included) to some country that didn't snoop so much.

Mostly though it's a system to avoid the hassles of dealing with credit cards, checks, and real money which isn't well suited for real life. No transaction fees, simple to use API and user interface, etc. It's amazing that a decade into widespread Net use that we still have no better sollution for the common problem of buying and selling online. Mostly due to really poorly thought out digital currency concepts from the mid-90's. e-gold wouldn't be so bad if their user interface wasn't so horrible. PayPal used to be ok (sort of) but has sucked since eBay bought them.

Re:Transaction Costs

[draziw]

As for faster then cash. I am pretty sure giving $1 is faster then running a credit card. Yea, as a person who worked in banking for almost five years I can pretty much expertly tell you that it is.

Well, you can say that, but you would be wrong. Creditcard = swipe card and hand over receipt.
Cash = take bills, put them in right spots, count out change, and hand it over along with receipt.
  Sure, if there is no change it is _close_ but CC is still faster at the places that are geared for it.

As to the volume - that and the lower overhead are what paypal is all about. $2 isn't a micropayment..

Re:Transaction Costs

[anthony_dipierro]

I thought that if I bought a stock now, it went up in X amount of dollars/share in 10 minutes, and then I sold it I would earn money.

You would, but that's not interest, that's a capital gain.

Re:Transaction Costs

[AviLazar]

Well, you can say that, but you would be wrong. Creditcard = swipe card and hand over receipt. Cash = take bills, put them in right spots, count out change, and hand it over along with receipt. Sure, if there is no change it is _close_ but CC is still faster at the places that are geared for it.

I was hoping you would go this route :) You are totally incorrect.
First lets compare apples to apples, you omitted some steps in CC that you have in Cash. And whats with your "take bills", like you don't have to "take CC"
CC= Swipe card, wait for machine to authorize payment (the longest part of the process), take the person's ID, note their ID number, have them sign the receipt, store the receipt in the correct slot. Let us not forget that many stores (smaller stores, but still many) swipe the card through a manual machine so they have to fill out the form and get information, plus make a phone call.

Cash = Give bills over, count change (potentially), get cash with receipt.

I never said $2 was a micropayment, but I do believe under our current system we will not be getting into pennies or fractions of pennies for purchases.

Re:Transaction Costs

[draziw]

I was hoping you would go this route :) You are totally incorrect.
First lets compare apples to apples, you omitted some steps in CC that you have in Cash. And whats with your "take bills", like you don't have to "take CC"
CC= Swipe card, wait for machine to authorize payment (the longest part of the process), take the person's ID, note their ID number, have them sign the receipt, store the receipt in the correct slot. Let us not forget that many stores (smaller stores, but still many) swipe the card through a manual machine so they have to fill out the form and get information, plus make a phone call.

You have no idea what you are talking about... 1. At the fast food places, many/most have the customer swipe, so the person at the register does _not_ take the card. 2. They don't check ID, or note and ID number, they also don't sign the receipt. Go to an airport in a reasonable sized city and get fastfood - then come back and post.
    Store doesn't hold paper receipt either - they use the electronic transaction log. I'd be happy to send you a public releations contact at a fast food firm so you can talk with them if you are too busy to see how it works for yourself. :)

Re:Transaction Costs

[AviLazar]

You have no idea what you are talking about... 1. At the fast food places, many/most have the customer swipe, so the person at the register does _not_ take the card. 2. They don't check ID, or note and ID number, they also don't sign the receipt. Go to an airport in a reasonable sized city and get fastfood - then come back and post. Store doesn't hold paper receipt either - they use the electronic transaction log. I'd be happy to send you a public releations contact at a fast food firm so you can talk with them if you are too busy to see how it works for yourself. :)

Unless you are swiping a card and using your PIN number, then yes they are supposed to take your signature.

Not checking ID is at the risk of the store. But again, they are supposed to. I cannot help it if they ignore their process...then again, maybe they don't need to count the cash handed to them.

Actually stores DO hold the paper receipts. The electronic logs is good enough for day to day processing, the paper receipts are required if there is a dispute.

Again, as a person who worked in banking for almost five years, I am pretty confident in the process. BTW, during that time I did help businesses setup Merchant services, and explained to them the process (which was detailed on paper). People do not follow the process, always, but that does not mean it is not in place. Also, many places are willing to ignore the process because the potential loss of money is so little compared to the convenience offered to the regular customer (i.e. Fast food places may make $10 for their one CC transaction).

Re:Transaction Costs

[draziw]

Are you in the real world? Most fast food places do not take a signature or check id. Ever use pay at the pump for gas with a credit card? No id check, no signature. Merchant services via a bank are about the worst deal for businesses, so you knowing something about that has zero to do with gas, fast food, etc... Not the same as retail sale of property vs consumables.

Re:Transaction Costs

[ndtechnologies]

Wow, somebody's angry...just because I'm posting about this site in my sig, homepage, and post doesn't mean that I am offtopic...who gave you mod-points anyway...

My 2 cents...

[nmg196]

Why would you need to pay someone only 1 or 2 pence/cents? I can't think of anything this cheap that you would need to buy on the internet. Except perhaps a license to play a music track once or something...

Re:My 2 cents...

[Epistax]

Charge someone $.01 an hour to use a piece of software. That's an actual reasonable amount to charge for software for a change, and few(er) people would circumvent it. For a part time developer (with an actual full time job), a nice app with (only) 100,000 people using it just say, two hours a month would net you a handsom $2000 a month. Make a few others and you can quit your full time job (although that's not advisable..).

I pick 100,000 people because that's between the number of people you'd get for a pay-to-use ($20 to $50 registration) and the number if it were freeware or shareware+(bugging to pay).

Re:My 2 cents...

[Itchy Rich]

Why would you need to pay someone only 1 or 2 pence/cents?

News and comment articles, blogs, music, fiction, per-image or per-gallery porn, email services, anything that's currently ad-supported...

I can't think of anything this cheap that you would need to buy on the internet.

There can be no market for those services until a payment structure exists. Once a viable payment structure exists people will come up with ways of charging for small amounts of content.

Re:My 2 cents...

[gravos]

There are TONS of things that paying a penny or two for would be really useful, and could make your online browsing experience much better.

For instance, imagine paying a penny to read a webcomic on a site (like, say http://penny-arcade.com/). It's a pittance to you, assuming all you have to do is click one button to make the payment. If 10,000 people pay one penny to read that comic, the author has made $100. This is a great way to support online content-based sites, and also to rid them of ads. Something that can get the darn ads off the Internet would be great!

Re:My 2 cents...

[Evro]

The most innovative use that comes to mind would be as a spam-prevention method built into email servers. If you could set your mail server to require payment -- say, $0.05 -- before accepting mail, spam would plummet pretty quickly. Right now, sending 1,000,000 spams costs the spammer basically nothing, assuming he'd have his internet connection anyway. But if mail servers were set to charge even a penny to accept an email, the spammer would be out $10,000 to send those messages. For the casual emailer, the costs would probably cancel themselves out to some extent as they send and receive emails. There are some other hurdles to overcome, but in general I think there are just new and interesting things that can be done with micropayments. And frankly an MP3 shouldn't cost more than $0.25.

Re:My 2 cents...

[Oculus Habent]

Right now, I have subscriptions to a couple of sites. They cost me about $60 per year, regardless of how much I use them. If, instead of a flat fee, I could pay a ten cents for a day of use ($30 = $0.11 if you use a site every weekday) or a cent or two per page view, I could still provide them revenue, but also have the cost be weighted to my use.

It also provides the opportunity for me to spend a little money at other sites. If I could spend a nickel or dime at a site for use instead of a $30 yearly - or even $2 monthly fee - it would be feasible for me to access more pay content without putting a hole in my budget.

I don't mind paying for information, so long as the prices aren't exorbitant. Micropayments can help make that possible.

Re:My 2 cents...

[Mr. Underbridge]

That one's been knocked around for way too long. There is absolutely no way to change all mail protocols to support such a scheme overnight. This is another one of those schemes that only works if it gets instant and universal acceptance. And it won't.

Re:My 2 cents...

[Tony Hoyle]

Good luck trying to get the spammers to pay you the $500 a month...

hint: they won't.

Re:My 2 cents...

[newrisejohn]

If that's the case, why not just have them buy time in lots of 100hrs/$1. Would you want your software to stop working because you were without an internet connection to confirm your use? That'd cause more headaches than it's worth.

I think these micropayments will be useful as I described. I don't think there really is a need for nanopayments, nor is there a demand for an infrastructure to accomodate them.

Re:My 2 cents...

[masterzora]

Ah, finally I get to share the wonder with the world. A friend of mine e-mailed this to me months ago, and I've shared it with a few friends, but now I hope Slashdot can enjoy.

An explanation of micropayments and how they can change the web for the better: http://www.scottmccloud.com/comics/icst/icst-6/ics t-6-full.html

Re:My 2 cents...

[Hell O'World]

This is another one of those schemes that only works if it gets instant and universal acceptance.

I don't think that's necessarily true. Imagine that a micro-payment system was already in place, and most people already had accounts in this new system. Then I could bounce all my emails explaining how to send me that tiny 1/10 of a cent. My friends would click on the link and the email would go through. And they would then want to join up, too.
There would need to be a big enough education campaign so people understand the global benefits, because there is an irritaion factor the first time you use it. But a tenth of a cent is not much of an irritation.

Re:My 2 cents...

[Sancho]

The best use of micropayments would be to make people pay an actual 2 cents whenever they use that phrase.

Re:My 2 cents...

[CProgrammer98]

You missed the point. I think the system that is being described is that payment is sent electronically WITH the email - so your email server will refuse to receieve any email that does not have payment attached.

It's not feasable for several reasons but spammers not paying up isn't one of them, because their emails wouldn't go anywhere.

Re:My 2 cents...

[thisislee]

Awesome! now I just need to get email address spammed like crazy and I'll get paid like crazy!

Re:My 2 cents...

[Evro]

You send me an email, I send you an email, net on both sides is zero. If what you have to say isn't worth 5 cents of my time then I don't really need to read it, do I?

Re:My 2 cents...

[Mr. Underbridge]

Imagine that a micro-payment system was already in place

That's a hell of an imagination. Who starts it? Who runs it? Who deals with the billions of financial transactions per day? Who's in charge of security? Who's in charge of the logistics of dealing with the jurisdictional problems that inevitably crop up? Who standardizes it?

Then I could bounce all my emails explaining how to send me that tiny 1/10 of a cent. My friends would click on the link and the email would go through. And they would then want to join up, too.

Or, more likely, your friends would call you and tell you they're not emailing you any more because they don't want to give their credit card number to some entity they don't trust for the pleasure of sending you email. Also, when you substitute "business associates" for "friends" that gets completely ridiculous. No business is going to even think about doing this. That's why this "system" will never gain traction.

There would need to be a big enough education campaign so people understand the global benefits

That assumes that your idea is so great, that the only reason it isn't used is ignorance. More likely, the public has no interest at all in such a system because it causes more problems than it solves.

We've been through this before. No system for email will work that requires a global education program, huge infrastructure changes, credit cards, or instant adoption. This one requires all four, and has no chance of success. This is one of those ideas that sounds really great in a vacuum, but implementation is completely infeasible.

Re:My 2 cents...

[cloudmaster]

Yeah, you have subscriptions to "information" sites. Sure. :)

Re:My 2 cents...

[pdc]

Slashdot charges 1c a page; at present this means users have to subscribe in advance. With a micropayments system that just worked, you could have a checkbox that hid adverts for 1c and all the hassle of aggregating the pennies would be done by the micropayments system: CmdrTaco and co would not have needed to write their own subscriptions system.

For a long time the theory has been that on-line comics would do the same: charge a tiny amount per page and have no ads. (The closest approach I know of is bitpass.com, where you typically charge 25c for a story (several comics pages).) A WWW with micropayments might be a lot nicer for individuals promoting their own content, but less profitable for advertisers.

Re:My 2 cents...

[SillySlashdotName]

I am not replying to you (parent poster) alone, but to all who have posted that this would stop spam.

It won't.

When did you last get email from a.spammer@myrealaddress.com?

I agree that, if spammers used their own accounts it would, but with things like zombies, spoofing, and all the other ways of sending spam I have read about that use OTHERS email accounts to send spam the cost to the spammer is zero, the OWNER of the account is the one who has to pay.

Of course, if there is real money at issue there is an additional tool for attacking spammers (actual theft of money as opposed to theft of bandwidth or what-have-you).

On the other hand, if I put $$ into an account to be able to email when I want, and a spammer drains my account, I have additional incentive to secure my machine - or change to a more secure OS, like maybe Linux.

Least anyone think I am against the idea, I LIKE the idea of micropayments ($0.01 or less per transaction) as long as the content is WORTH the price. Some ideas already mentioned were web comic strips, pr0n, and MP3 files. What I DON'T want to see is a per page fee to surf, or a per search fee to use Google, or a portal fee to go to a page found through a Google search.

I can see where Google could charge a fee to search, and then charge another fee to portal you to a search result site, then have the site charge a fee to view...

Each a separate transaction, each wholly justifiable in their owners mind, and each killing the internet with the death of a thousand cuts.

Would you (generic you, not the parent poster) pay an ADDITIONAL $1.00 per day for internet access - in addition to whatever you are currently paying? If not, then the aggregate micropayments would have to be less than $1.00 per day.

In addition, I would assume there would be a notice when you were going to a pay-per-view site, and if a majority of web sites were PPV you could be hitting a notice every other click!

Although an ANONYMOUS payment would be much preferable to the annoying registration screens from, for example, The New York Times. Not sure how an anonymous payment could possible work - probably it can't, but it would be a nice alternative.

Re:My 2 cents...

[Epistax]

100 hrs at $1 just isn't as smooth, that's all. If by nanopayments you mean less than $0.01, I think that's supported. Just current reports don't show fractions of cents very often.

Re:My 2 cents...

[Rirath.com]

Something that can get the darn ads off the Internet would be great!

Already been done. Firefox and Adblock will solve all your problems. If you're really worried about the sites no longer getting ad money, simply set it to hide the banners rather than block them. You probably weren't going to click them anyway -- and you can whitelist a site or turn it off with a simple keypress.

As for micropayments, I'd love them... (Google?! Let us hope.) but, personally I see the internet tip jar exploding faster than required payments. I'd gladly pay a web comic like Penny-Arcade.com or VGCats.com $0.01 per comic I found funny, on a regular basis. I'd also gladly donate small amounts to various software, per version!

The trouble with charging any fee per view / download, even only $0.01, is that it seems to me it would greatly hurt the spread of that product. Perhaps if one could view all but the newest comic with no fee, and download old versions or the new version after x days with no fee... but I'd still prefer a voluntary tip.

Re:My 2 cents...

[anthony_dipierro]

Except perhaps a license to play a music track once or something...

Along the same lines, how about about a seed for a torrent file? What about websites paying you? $0.01 for every Score:5 slashdot post? $.05 for being the primary author of a featured Wikipedia article? $0.02 for answering someone's search query?

Actually, when it comes to websites paying the person using the site, I can think of a lot more uses than vice-versa. For content providers ads are usually preferrable to micropayments. Especially if the ads aren't too pushy (I'd much rather have Google ads than pay even $0.001 a search, in fact, even if I could turn off Google ads I probably wouldn't; Slashdot ads on the other hand are annoying as hell, but I wouldn't pay to remove them because I'd feel like I was being extorted or something).

Of course, we already do have micropayments - eGold is the most popular site for them. But it's somewhat expensive getting money in and out of eGold. With Paypal, on the other hand, it's free to add money (using ACH transfer from your checking account). In fact, I put money into my Paypal account about once a week (I use my Paypal debit card for just about everything).

Re:My 2 cents...

[nmg196]

> When did you last get email from a.spammer@myrealaddress.com?

That's irrelevant. With this system it wouldn't matter if they forged the e-mail address or not (obviously).

> email accounts to send spam the cost to the spammer is zero

Err, only if they can forge the micropayments put in the email! It's zero cost to post paper mail if you can steal money. I think you've missed the entire point. This is a PAYMENTS system which would require real money IN the e-mail for it to work. Unless the spammer can crack the whole paypal system, then he can't do what you're suggesting.

> Although an ANONYMOUS payment would be much preferable to the annoying registration screens from, for example, The New York Times

The registration is FREE. Wake up please. They are not trying to make money from this, but merely track the site's demographic usage. Charging 1 cent to access the site won't help them know who is using their site will it?! I can hardly see how it's particularly annoying when you only have to do it ONCE.

Re:My 2 cents...

[SillySlashdotName]

You seem to have missed my point.

If the email has a forged address then the spammer sent it from one machine but tried to make it seem it came from another. WHATEVER machine it was sent from would have had to have paid the micropayment to get it sent/accepted. If the originating machine was the spammers' machine then the spammer would have to have paid in the amount of the micropayment.

IF THE SPAMMER HIJACKED YOUR MACHINE, they would be sending their spam FROM YOUR ACCOUNT, using money YOU paid into YOUR account for YOUR use. Repeat after me, the cost to THE SPAMMER is zero.

Have you ever received metered mail? That is the mail that doesn't have a stamp, but instead has an imprint or printed (I have mostly seen printed in red, don't know if that is a requirement or not but at one time a special dye was required that was machine readable under alternative light sources so that the validity of the imprint was checked) with a notice that the postage has been paid. The Meter is a sealed unit that is (or at least was when I worked at a local postal service branch) brought to the Post Office and 'recharged' by giving the clerk an amount of money that was then securely added to the meter. The owner of the meter could then affix 'postage' to their mail up to the amount they had bought. When the postage amount bought was used up, the meter was returned to the Post Office and the process was repeated.

Sound familiar? Reminds me of the micropayment idea, except instead of paying the PO to DELIVER your mail you are paying the recipient to ACCEPT your email.

If you had such a meter and put money into postage on that meter, and I somehow gained access to your meter, I could send mail for free - free TO ME, because I was using YOUR money for the postage.

That is my point that you have missed. Assume I put money into MY account in order to send MY email with a micropayment attached. EvilSpammer(tm) cracks my machine and sends email FROM MY ACCOUNT, USING MY MONEY for the micropayment. EvilSpammer(tm) could not care less about Paypal or any other micropayment system. They have not forged anything, they have STOLEN from my account my money and used it for their own purposes.

If I put $100 into a micropayment account in order to send 10,000 emails at $0.01 each but EvilSpammer(tm) uses it all up and I can't send that email chain letter to all my family and friends and so wind up with 40 years of bad luck, I might be MOTIVATED to find a more secure OS.

Your final comment was about the registration pages. You are correct, they are used to track demographics. Why are demographics tracked? So that advertisers can be pitched to buy advertising space based on those demographics, and the price of the advertising can be increased with teh demographic data as justification. Possibly also so that marketing email can be sent to those who register, or so that telemarketing persons can use the information for cold calling purposes - I don't know if this would constitute a 'prior business relationship' under the telemarketer laws or not. I don't know that The New York Times (TNYT) does any of that or not, but the possibility exists, and all of those activities are intended to generate income.

Again, my point which you seem to have missed, is that the POINT of the registration page is to gain income at some point; my micropayment alternative would give the website an immediate payment IN ORDER TO COMPENSATE FOR NOT GAINING INCOME FROM THE REGISTRATION PAGE, thereby causing the registration page to 'go-away' quietly and painlessly for those using the micropayment system.

Yes, you only have to do the registration once - if you enable cookies. Some people don't want cookies tracking their web movements. Some people delete cookies when found on their machine. Those people have to register again and again.

In addition, some people use bogus information to register, messing with the demographic information. I am pretty sure TNYT would prefer an accurate demographic from those who WANT their information included (or just don't care), while a micropayment from those who really would rather not give out their information would be felt to be better than a false entry in their demographic data.

Re:My 2 cents...

[Tom]

Some other reply got it right.

It's not "collect later". It's "send me money now (micropayment) or your mail goes straight to the trash bin".

No payment, no mail delivery.

Re:My 2 cents...

[Tom]

It does require a major change, that's right. However, the change might be very different from what you think is needed.

Once upon a time, society was held back by the problem that getting what you needed was a very, very long journey. First you had to exchange your sheep for a cow, then bring that cow to the miller where you got grain for it, bring the grain and some milk to the baker, and finally the bread could be exchanged for that knife you wanted.

I'm sure someone proposed something that would've worked, but required wide-ranging changes to the infrastructure, plus user education and a new language for barter.

And someone invented money, solving the problem with a new approach.

I'm not the one with the new approach. But I'm saying that if an idea is infeasable, it might not be due to the idea, but due to our approach of implementation.

10% Charge

[Anonymous Coward]

The new fees will enable merchants to process payments at a rate of 5 percent plus 5 cents per transaction.

So for $0.99 it will still take a 10% fee.

Bastards.

Re:10% Charge

[wed128]

and for $0.05 it will take a 105% fee. Bastards.

Re:10% Charge

[qwp]

yes, but you have to look at the system as of now.
Right now you pay 30 cents plus a % of the sale.

I run a dollar/month hosting company, and 35% of every monthly sale goes to paypal. Which the way I setup the system, is just the hit I take. I've accepted that because the hosting company isn't setup to make gobs of money, it's just ment to support designers and provide a better service. With this new micropayment structure I could earn 25% more each month, without doing a single change.

Yes it is still evil, but hey I just had to sign up for a free paypal account to start running accounts through. I'd rather pay 500 dollars over 3 years than 300 dollars up front for a system.

God forbid....

[xao gypsie]

....that the artists themselves would have the ability to sell and market their own music without big companies trying to get their piece of the pie. I am all for anything that returns music to an art-form rather than a business model.

Re:God forbid....

[ScentCone]

God forbid ... that the artists themselves would have the ability to sell and market their own music without big companies trying to get their piece of the pie.

It's not entirely clear what you mean, but I'm assuming you're refering to a company like PayPal "getting a piece of the pie" by facilitating those transactions of a buck or two. What's your notion, instead? That the musicians re-invent micropayments themselves, establish the infrastructure, the banking connections, etc., thus cutting out "the man," and then having no time to ever write or record another lick of music?

We're a civilization of specialists. Most musicians don't grow all of their own food, either, and instead allow other people to get a "piece" of their food money. Someone else gets a piece of the pie when the band replaces the brake pads on their van, too. Making it easier for artists to handle small transactions is making it better for the artists, but it isn't better for anyone if the people building systems like that have no expectation of making a living off of their own efforts and investments themselves.

Certainly artists that don't find this sort of tool useful can just... not use it! If tip jars at bars and coffee houses are more their speed, then that's always an option, too.

Re:God forbid....

[zotz]

"Someone else gets a piece of the pie when the band replaces the brake pads on their van, too."

A piece of the pie and a percentage of the pie can be two very different things.

all the best,

drew
--
http://www.ourmedia.org/user/17145

Re:God forbid....

[CrosbieFitch]

http://www.quidmusic.com/ is trying to provide a simple means for musicians to cut out "the man".

Re:God forbid....

[Lumpy]

Musicians already do have this ability.

it's called a live concert. musicians have been doing this for 90,000,000 years. they can sell admission without giving "the man" a cut of the pie.

Hell I see musicians doing this on street corners in large cities.... Ok calling some of them "musicians" is a bit of a stretch.

There are thousands of ways for you to get paid without paying fees, taxes, extortion payments. unfurtulately all of them require you to be able to physically touch the person buying from you.

anything else either requires billions to build or buy your own infrastructure or you pay "fees".

Re:God forbid....

[CrosbieFitch]

I didn't say it cut out all middle-men, it cuts out "the man", i.e. the greedy labels who take vastly more than 15%, e.g. 99%.

Much of that 15% goes in covering the transaction costs, that people like PayPal charge (until now).

No doubt QuidMusic will revise their fees in light of this, perhaps bringing it as low as 5%?

Re:God forbid....

[deinol]

they can sell admission without giving "the man" a cut of the pie.

While it is true that musicians make more from live performances, "the man" still gets a cut. At least, any signfigant event a large cut goes to TicketMaster. I remember a while back some big name bands tried to do a tour without using ticketmaster, and even they couldn't manage it.

Sure, a small venue can be booked without going through 'the man', but it's hard to avoid if you want to actually make a living through music.

Re:God forbid....

[99BottlesOfBeerInMyF]

It's not entirely clear what you mean, but I'm assuming you're refering to a company like PayPal "getting a piece of the pie" by facilitating those transactions of a buck or two.

I don't think that is what the previous poster was getting at, at all. Previous to the iTunes music store it was very hard to buy a song online because no one was willing to process that small of credit card payments. Apple made a deal and now you can buy one song for one dollar on your credit card. Several other music services have tried with varying amounts of success to make a similar bargain with the credit card companies.

The only way to get your songs for sale on the iTunes music store is for you to sign with a record label that has an agreement with Apple. There are some great independent record labels that treat artists fairly, but very few them ever gets anything played on the radio, on MTV, etc. The MPAA record companies can get anything they want on MTV or the radio and use that as their own marketing tool. Other than that only songs that are already very popular (the indy hits) ever make it into major advertising channels. The MPAA record companies are notorious for screwing over any artist who signs with them. A great many bands with moderate popularity and record sales actually end up owing money to the record label, rather than profiting from their work and success. Only the very rare top hits really make money with such a deal. The main reason anyone signs with them is because it is one of the few ways to get your music heard and sold to a large audience. If you want to be famous (that's most musicians) you sign your deal with the devil and hope for the best.

What I believe the previous poster was getting at was that with micro-payments becoming a reality in general, bands can now distribute entirely online and make a profit. This opens the road for moderately popular musicians to self-publish and self-promote without paying most or all of their profits to the industry giants and without going into debt or signing away their next several years worth of copyrights. By "big companies" I d guess he meant "record companies" who don't really add any value, but suck up the majority of the profits in the record industry.

Wrong problem

[vettemph]

Maybe noboby wants to sell anything for a penny.

Re:Wrong problem

[p3d0]

Yes. And maybe nobody wants an unpredictable cost structure. Rather than $0.01 per click, maybe users want to pay $2 per month and not worry about it.

Stuff that matters?

[EvilCabbage]

Screw Paypal. Seriously. I've quit dealing with anybody only accepting Paypal as payment methods, I've voiced my dissent (in a calm fashion) over their continued poor service and especially after the recent charity "issues", I'd urge other people to do the same.

Re:Stuff that matters?

[Tom]

Name an alternative.

My online game accepts donations. I've looked very hard two years ago when I added that feature, and I found a total of two services I could use (PayPal and Moneybookers). Everyone else asks either for a ridiculous set-up fee or is otherwise unsuited for small businesses, donations, etc.

I started offering both. In 18 months, a grand total of $10 was sent through Moneybookers, compared to a few thousand through Paypal. Guess which one I dropped.

Re:Stuff that matters?

[QuantumG]

And yet you don't recommend any alternatives or even give any good reasons why PayPal is no good. I hope your "urging" of other people is typically done more effectively.

In the mean time, there's plenty of people who are happy with PayPal's service.

Re:Stuff that matters?

[Anonymous Coward]

Charity issues?

You do realize the charity issues had to do with an individual that was taking charity payments that wasn't a non-profit, had just opened this particular account on a holiday weekend when no one was minding the store (probably less than a quarter of the staff at PayPal) and was raking in thousands of $$$s on a product they categorized as a physical product but wasn't forcing their people to enter physical addresses into the Paypal system that is designed to look for fraud. On top of that, several people complained that they think this might be fraud on said holiday weekend.

Honestly -- I'd be glad that someone put a temporary halt on my money if the people collecting it really didn't have a clue what was going on. They didn't know who they were going to give the money to -- they wanted to give directly to the RedCross, but the Red Cross told them that they only accepted direct donations and nondirect needed to go through UnitedWay which a LOT of people object to (I won't give to any organization through united way -- I had a fund raiser for the 9/11 attack that raised $50k and was SUPPOSED to go through Red Cross using United Way as a front, and I find out that less than half went there, while a good portion went to administrative fees -- this is something I needed to verify because the event organization's accountant needed to have this on record or I would never have found out).

So the one charity issue I know you were thinking of was done rather poorly. Paypal protected everyone involved. They didn't take the money and run, nor did they stop anyone from donating -- infact they clarified that if you want to donate through PP and make certain 100% of the funds went to Red Cross, you needed to use the link to the Red Cross...and not some random link that someone claims is going there.

PP has a few problems, but most involve people that are working with shady individuals and get their accounts locked. I'd rather my account is locked for a month while its disputed than with my bank issued CC processor where I'm just left with a loss AND a chargeback.

Yeah, this is off topic. Please mod it as such. Its not a troll or a flame just because its anonymous.

Re:Stuff that matters?

[OverkillTASF]

I concur! I had my game-ending EBay/PayPal fiasco where they not only sided with the big guy, but they also shut down my account (Later reopened after an irate email) after the big guy then countered my claim with a claim saying that I never payed him. Add that on to the fact that if you buy anything firearm related with your PayPal account (Even if it is 100% legal) they will close your account..... Well... Byeeeeeeee.

For auctions, I have moved to EBid, which is sadly under-populated, and I have yet to find another good online money transactor.

Re:Stuff that matters?

[Tony Hoyle]

They shut down the account without any warning, were not contactable and their automated system for reinstatement did not work.

When they were finally contacted they refused to release the money for 9 days, and stated that as they have an exclusive contract with United Way they can't authorize charity payments to the red cross.

So instead they refunded all the money - *minus* all their transaction fees... so paypal made a nice tidy sum and the people in new orleans got zip.

Nice company.

Re:Stuff that matters?

[EvilCabbage]

"Name an alternative."

Why? I'm happy just not dealing with them at all. If it means I 'miss out' on some crap I didn't need in the first place, so be it.

Re:Stuff that matters?

[sgtrock]

The good news is that some banks are making it easy to send money to individuals. You can cut PayPal out of the loop entirely. Example:

US Bank

Check them out. Might be worthwhile to consider for your online game as well.

Re:Stuff that matters?

[Anonymous Coward]

Name an alternative.

www.paypalsucks.com/options.shtml

Re:Stuff that matters?

[Vintermann]

Why on earth did you drop moneybookers? It didn't exactly cost you very much to publish an email adress did it? Ten dollars may not be very much, but what's the point of refusing them?

The ONLY kind of online payment system I have used (short of credit cards over SSL) is moneybookers, and I won't use anything else for that scale of payments unless they go out of business.

Re:Stuff that matters?

[maxpublic]

And let's not forget that Paypal has managed to piss off so many customers over their 'business practices' that they're currently the target of a class action lawsuit. Or that they're being investigated for fraud. Yep, that's one highly respectable company there....

Max

Re:Stuff that matters?

[joe52]

Another option is bitpass.

Paypal is now cheaper for transactions of more than 50 cents, but bitpass still provides a working solution (and they are cheaper for transactions of less than 50 cents). Bitpass also offers additional functionality for securing content, but it sounds like you wouldn't need any of that.

Re:Stuff that matters?

[hackstraw]

http://www.regsoft.com/ . I'm sure there are many, many others, but this is one that a friend of mine uses for his shareware.

I too refuse to do any business whatsoever if PayPal is involved. It astounds me how many times I've contacted people that think they need to go through PayPal and I would get no response if I offer to mail them a check. And this is for a donation, not a fixed payment.

Re:Stuff that matters?

[acceleriter]

The donors who had the transaction fees deducted should initate chargebacks for the amount of the fees. If PayPal reversed the transaction, then no transaction has taken place, and no fees are due.

Re:Stuff that matters?

[jez9999]

Apparently you never heard from the thousands of people who Paypal has screwed over, an example of which was illustrated by this recent story. I never use Paypal anymore, and haven't for many years. I'm still alive.

Re:Stuff that matters?

[JavaRob]

I use PayPal for website subscription payments and online software purchases, though I also accept personal checks, money orders, and purchase orders from schools.

I've read the occasional horror story about PayPal, but I've never had a problem (knock on wood), and I've processed thousands of dollars through them. The stories do concern me, but PayPal is simply head and shoulders above all other payment processors that I've found.

RegSoft, for instance, since you mention them. Minimum $3 charge (and my software is only $12, so that's 25% fee). I get my money a minimum of a month after the sale, I have to pay setup fees, as far as I can tell they don't integrate into my backend OR handle subscription-based payments, and they'd charge me $50 setup just to hit a URL on my site to generate the license key (without even the option of a secure access via callback, etc.).

For that same $12 sale, PayPal skims off only 65 cents (and I have access to the remaining 11.35 immediately), has no setup fees, DOES handle subscriptions, and is securely integrated with my website (check their site for "IPN"), so my database is updated with the payment immediately.

The upside of RegSoft is that it accepts more currencies and accepts phone/fax orders; the downside of PayPal is that it encourages people to signup for a PayPal account, though they can make a simple credit-card payment as well. I deal with this with big notices on my site saying "YOU DO NOT need a PayPal account", etc.. And honestly, I don't think I'm missing much currency-wise -- I accept US dollars, Canadian $, euros, and pounds; that covers the vast majority of my users (and people in other places can and do pay by mail).

They simply don't compare. So I just keep the balance in my PP account pretty low (though the balance I DO have is earning 3.5% interest... yet another factor).

There are cheaper processors out there than RegSoft (Kagi for one, if I remember correctly), but PayPal is pretty tough to beat. I don't ignore the horror stories -- but I do take them with a large grain of salt, since PayPal processes huge numbers of payments with (it seems) razor-slim margins and not much money spent on customer support. Most of the bad situations sound to me like sensible fraud triggers get hit... but then PayPal takes too long to sort the matter out, so people get pissed. Seriously people, if you're using the *cheapest* solution you have to assume they won't be the most reliable, so you'd better have a backup, and don't tie up all your money in a PayPal account!

Re:Stuff that matters?

[QMO]

Sadly, being the target (or victim) of a class-action lawsuit often means that you have money, and nothing more.

Hopefully people that are accused of fraud are investigated.

Regretfully, some people prefer rumors and accusations to evidence.

Perhaps Paypal is the epitome of all that is good and beautiful. Perhaps it is more evil than the Crudpuppy. Your post provides no real evidence either way.

Re:Stuff that matters?

[maxpublic]

Regretfully, some people prefer rumors and accusations to evidence.

You mean like the "rumor" that they're currently under investigation by no less than SIX state AG offices for fraudulent business practices? That sort of baseless accusation?

Oh yes, I can see how one could doubt disreputable folks like AGs in favor of the angelic Paypal. We all know how fond AGs are of spending millions chasing unsubstantiated rumors....

Max

Re:Stuff that matters?

[QMO]

"all know how fond AGs are of spending millions chasing unsubstantiated rumors"

First: (a technicality) Attorneys General investigate the legally innocent. If they are legally guilty, it is because the investigation and trial are finished.
Second: You can't tell whether the rumor is unsubstantantiated before investigating, so I would assume that all law enforcment spends time investigating rumors that later prove to be unsubstantiated.
Third: My post didn't presume innocence, though perhaps it should have.
Fourth: I expect that AGs are much more likely to spend millions chasing high-profile possibilities, than chasing someone I've never heard of. (Attorneys General are politicians too.)

I apparently touched a nerve.
Although I hadn't intended my previous post as an attack, your response suggests that it was interpreted that way. Sorry.
I add this note because, although this post is also not meant to be antagonistic, it seems (to me) to sound even less friendly. Please don't get all offended.

Re:Stuff that matters?

[Blakey Rat]

What about Amazon.com? They offer the same service as PayPal, have a MUCH better reputation and at least as much name-recognition.

Re:Stuff that matters?

[Hal The Computer]

Well, let's pretend that Tom lives in Germany. And let's pretend that Amazon.com only lets you set up a donation account if you live in the United States. What about Amazon.com again?

Re:Stuff that matters?

[anthony_dipierro]

Man, I keep hearing bad things about Paypal, but I've never experienced any of them. And I run hundreds of dollars through Paypal every month - I use my Paypal debit card for just about everything, and get 1.5% cash back. Just paid $302 to my car insurance company yesterday through Paypal - got $4.53 debited(*) back immediately.

(*) Yeah, yeah, Paypal calls it a credit, but on my side of the ledger it's called a debit.

Re:Stuff that matters?

[Reziac]

There is also kagi.com, who've been around since 1994, and I've never heard a single complaint. The lack of complaints may be because they are big on making everything be legal *and* documented.

Fee structure is probably not suitable for micropayments, but they get used a lot for low-priced items like CDs. Anyway, just to point out another alternative (that I've actually used for buying stuff online).

[I'd never heard of moneybookers, but hey, the more you know about, the more options you have!]

Re:Stuff that matters?

[CeeJay27]

One alternative I have seen - Click&Buy (www.clickandbuy.com). Apple iTunes uses it in Europe. New in USA.

Re:Stuff that matters?

[Tom]

Why on earth did you drop moneybookers?

Because it takes additional effort to support two different payment systems, and it makes it more difficult to consolidate the money coming in.

Bitpass has had micropayments for a long time

[RhettR]

BitPass has had micropayments for some time... the catch is you have to buy at least $3 credits, but then you can pay those anonymously to websites in increments as small as one cent.

Microposts

[Anonymous Coward]

In related news:
Slashdot to introduce microposts, the offers seems geared toward the anonymous cowards posting under the 2 lines area...

Re:Microposts

[ateijelo]

At a first glance I thought the parent post subject was Microsoft, and I thought: Oh, crap, Slashdot can't really let a story go by without saying anything about Microsoft.
I then realized I was wrong.
But, after reading my own post, I see I was right after all.

Still can't charge "a penny"

[doogieb]

The article states that for these low transaction amounts, the charge will be 5% + 5 cents, so charging just a penny would cost you money!

Easy joke missed...

[MosesJones]

charge a penny on-line

The phrase is SPEND a penny

I can't believe that Slashdot editors missed such a simple and infantile joke opportunity.

Are standards improving or slipping?

Re:Charge a few pennies?

[Anonymous Coward]

I'll go apply for a patent on "Aggregation of currency in a leather based sheath" quickly!

Millipayments

[kriegsman]

If micropayments are for just a few cents, shouldn't transactions in the $10-$90 range be called millipayments?

-Mark

Re:Millipayments

[Fungus King]

Yes, and that would mean that transactions in the $10bn - $90bn range would be called megapayments, so it's still technically accurate :)

Paypal seizes $27K of Hurricance Katrina Red Cross

[Anonymous Coward]

Paypal just siezed $27,000 of aid going to the Red Cross from SomethingAwful.com users - I'd say thats reason enough to cancel if you haven't already been royally screwed by them...

Ask gas stations.

[mshiltonj]

They've figured out how to charge me 3.29 + 9/10 for a gallon of gas. 9/10 of one cent is pretty micro.

Re:Ask gas stations.

[Will_Malverson]

Not only that, but they typically measure the amount of gasoline that you bought down to the thousandth of a gallon -- The "true" price of whatever you pumped should then be specified down to the millionth of a dollar, or ten-thousandth of a penny.

To avoid rounding issues, if they're going to specify the price down to 1/1000 of a dollar, they'd have to have pumps with a granularity of ten gallons.

Re:Ask gas stations.

[zippthorne]

Mods are you crazy??? parent was obviously, "funny."

Since someone obviously needs a math lesson,

To a first order, the rounding goes like the least *number* of significant digits. If you're going to charge people down to the tenth of a penny, you'd better have the means of measuring a tenth of a penny worth of gasoline.

Re:Ask gas stations.

[necro2607]

$3.29/gallon? Not bad. Last night I paid $1.13 CDN/litre for gas, 87 octane ($1.20+ isn't uncommon). That's $4.28 CDN/gallon which, converted to US funds, is $3.60/gallon...

Re:Ask gas stations.

[AaronLawrence]

Not sure if you're joking, but why do they need to "avoid" rounding issues? Rounding always happens in commerce.

Gas stations specify price to 3 decimal places, most of the time. Possibly 4 decimals in a few countries with high-valued currency. (Not speculation: I work on this stuff)

Everybody else get a dozen+ PayPal's Emails/day?

[xmas2003]

How many other /.'ers get the continual torrent of "your PayPal account is under review due to unusual activity - click here to restore full access" with the clicky being a phishing trap? I'm actually glad that I do NOT have a PayPal account (never did) since these are, of course, easily ignoreable, although they are getting better in terms of evading my spam filters and looking more authentic.

The other "main" ones appear to be Amazon and eBay - but I have yet to get a Email saying my Slashdot account is under review ... ;-)

Re:Paypal seizes $27K of Hurricance Katrina Red Cr

[Anonymous Coward]

Yeah, seriously. I'm not going to trust anything PayPal does until they are properly regulated by the FDIC. Right now they answer to nobody.

Penny-sized micropayments v. $-sized dispute costs

[G4from128k]

The core challenge for small micropayments is the high cost of dealing with disputes. The cost to the company of a single dispute can be $5 to $50 depending on how much communication and labor is required to resolve a disputed transaction. If the transaction service is only charging a penny, then it only takes disputed charges in 1 in 5000 to 1 in 500 transactions to totally consume all the revenues - leaving no money for the actual service (software, hardware, marketing, etc.) in the other 99.9% of the transactions. Even if the cost of the technology were zero, these "real people" costs would make micropayments prohibitive.

Paypal tries to avoid these high cost by making it very hard to contact a "real" person. Real people just cost too much. Of course, Paypal's alleged reputation for poor customer service (see paypalsucks.com) is the side effect of trying to keep costs down to enable low-dollar transactions.

Perhaps when someone creates a competent AI for customer service, micropayments could work. Given that most companies still have trouble getting competent people for customer service, I'm not hopeful.

Structural problems

[confusion]

There are some structural problems with micropayments that need to be overcome:

- paypal sucks. Everytime I think I should give them a second chance, they bombard me with 10 more reasons I need to stay away. They are like Best Buy in that regard.

- Charge/merchant processing is still horribly expensive, to the point of making this unattainable. Long ago I had thought that paypal was going to smash the deathgrip that charge processors had on the world, but that has not come to pass, as they likely are also a victim of the charge processors.

If I spend $.50 per month on digital media, and even if charges are batched monthly AND they get a super deal on charge processing costs, they will likely end up with

Re:Paypal seizes $27K of Hurricance Katrina Red Cr

[EiZei]

Well, they already returning it to the donators but they did manage to shave off some fees and that money is not going to the ones that are actually needing it.

Fuck em'.

e-gold and other alternatives have lower fees

[Anonymous Coward]

This announcement puts PayPal fees for sub USD2 payments at 5% + USD0.05. Here is a comparison of fees in USD for various "micropayments" vs. e-gold http://www.e-gold.com/ fees.

0.25 PayPal 0.0625 e-gold 0.0154
0.75 PayPal 0.0875 e-gold 0.0404
1.00 PayPal 0.1000 e-gold 0.0529
1.50 PayPal 0.1250 e-gold 0.0724
2.00 PayPal 0.1500 e-gold 0.0786

There is a page that shows how many of these
payments e-gold is processing here http://stats.e-gold.com/. Looks like in the
last 24 hours it was somewhere between 10,000
and 20,000.

Other similar alternatives include Pecunix http://www.pecunix.com/, 1MDC http://www.1mdc.com/, and E-Bullion http://www.e-bullion.com/.

Re:Everybody else get a dozen+ PayPal's Emails/day

[jurt1235]

Just fill it in with fake info, then the scammer has to go through that too, thus making it more costly.

Anyway: For a $2 micropayment per scammail I can take this burden of you, and fill it in with fake info for you.

Good deal for PayPal, but not for you

[miniver]

"The new fees will enable merchants to process payments at a rate of 5 percent plus 5 cents per transaction."

• $0.20 transaction -> $0.06 = 30.0% for PayPal
• $0.40 transaction -> $0.07 = 17.5% for PayPal
• $0.60 transaction -> $0.08 = 13.3% for PayPal
• $0.80 transaction -> $0.09 = 11.25% for PayPal
• $1.00 transaction -> $0.10 = 10.0% for PayPal
• $1.20 transaction -> $0.11 = 9.16% for PayPal
• $1.40 transaction -> $0.12 = 8.57% for PayPal
• $1.60 transaction -> $0.13 = 8.13% for PayPal
• $1.80 transaction -> $0.14 = 7.78% for PayPal
• $2.00 transaction -> $0.15 = 7.5% for PayPal

Not a bad deal for PayPal, but not a good deal for anyone else.

Re:Good deal for PayPal, but not for you

[aaarrrgggh]

A ways back, I was told that the cheapest credit card processing was $0.10 per transaction (wholesale, all electronic). Without regulatory oversight and a reasonable transaction tracking system, they could shave close to 20% off that cost, and maybe get it as low as $0.08.

Granted, these are just the back-end processing cost of each transaction, and do not include things like fees PayPal pays on deposits, front-office and marketing costs, and profit margin, but it does give an idea where the money lies.

Re:Good deal for PayPal, but not for you

[Mike Keester]

You just hit upon the number one reason why micropayments will never take hold anytime soon.

Banks and CC processors are addicted to fees. Like a crack whore, they gotta have their fix. $2 bucks for ATMs, $39 late payment, $25 overdraft, etc...

When you use your Visa or MC, it's the merchant that gets screwed for low-value, low-volume transactions. The only reason they even accept CCs is because consumers demand the convenience.

Banks are just fine with micropayments - they don't care as long as they get their standard cut. However, as a merchant, there's no way in hell I would sell something for $.01 and expect to take payment via CC.

Re:Good deal for PayPal, but not for you

[MegaFur]

But fees aren't crack or something--they are micropayments! They're just going to the middleman instead of the guy at the other end of the chain. Of course banks and the like aren't going to give them up. If micropayments are actually capable of generating real money for someone (in theory), then it stands to reason that an even larger per-transaction fee will make money for the middleman in practice. So the micropayments idea is screwed, at least for now.

If someone could figure a way to send over the payments feeless, then there ya go.

Micropayments aren't new

[Alioth]

Still amazing that in 2005 nobody has figured out a way to make it simple to charge a penny on-line.

Micropayments were available in the mid to late 1980s on Prestel and Micronet (a British pre-world wide web online service). "Information providers" on Prestel/Micronet could have free pages, or pages that cost money to view from 1 penny and up. In 1986, I was buying and downloading games for my Sinclair Spectrum for a reasonable discount over going to the shop and buying the same game on tape. Multi-user games such as Shades were paid for using micropayments (1 penny increments). You could rent Gallery pages (a bit like making your own home page on the web today) by using this system.

Of course with Prestel/Micronet it was easy since Prestel just added the charges to your bill quarterly. However, there's no reason why PayPal couldn't have done the same for PayPal user to PayPal user transactions since they wouldn't have to interact with any banking institutions to do it, so really it's boo on PayPal for taking so long to actually make this happen.

Royally Screwed By Paypal

[HackNack]

Paypal scares me now. Too many people depent on it as their sole way to receive payments. I mean, as long as they're the ones getting jacked with the high fees, that's fine with me.

The thing about Paypal is that its buyer protection is rediculous. I've recently sold something to a guy in Europe and sent it with USPS. A few weeks later he disputes saying that he never received the item. Then I look at his eBay feedback and realize that I just got screwed. There is nothing I can do. So now I have to refuse selling to people outside of North America or I have to charge them $50+ for UPS or FedEx.

It seems like after eBay takes their cut and Paypal takes their cut, the seller is left with a sore behind.

Re:Royally Screwed By Paypal

[Basje]

This protection is exactly what is needed to protect the internet as a viable channel for doing business with consumers, and a good thing.

It's too bad you got screwed, but as a merchant, you are able to factor in the costs of either taking and doing the research.

It's common for merchants to complain about the costs of customer service. They tend to only view the internet as a convenient (low cost) channel to present their merchandise, and to pass the risks to the consumers.

That's nice

[Dan East]

I'm a developer that has used PayPal to receive monies for the sale of thousands of copies of my software over the past several years. So I am one of those that doesn't perceive PayPal as evil, as they have never screwed me over personally.

However, as nice as it is that PayPal is going to make this happen, it really needs to be implemented within the actual banking system. I guess things are still too antiquated in some banking circles to reduce the transaction overhead enough to allow micropayments. However since their communication is already 100% digital, one would think they could make this happen if only they really wanted too. I guess too much human interaction is still involved, and it would be very difficult to track down theft when instead of a few hundred dollar transactions, someone has to look at several thousand 5 cent transactions.

Also, when micropayments become commonplace, I expect phishing to grow immensely. If something only costs, say, a quarter, then a person would be more likely to pay because the risk is so low (I can see the spam subjects now: "Download top-40 songs for only 25 cents each!"). And thus it follows that when the consumer is fleeced, they will not be as likely to pursue the issue to get their money back. My daughter lost a quarter in the vending machine last week, and it simply wasn't worth the effort on my part to hunt someone down to try and get a refund.

Also, can you imaging trying to contact the FBI to report an interstate theft of this kind?

"How much of your money did they take, sir?"
"25 cents"
"Did you know I get paid $20 an hour, and you have already used up $2 of my employers time just talking to me?"
"No, I didn't"
"[click] [sound of dialtone]"

Dan East

Re:That's nice

[Gannoc]

"Did you know I get paid $20 an hour, and you have already used up $2 of my employers time just talking to me?"

Actually, that is the big reason why you can't get rid of "stupid" class action lawsuits. What is to prevent a company from stealing 10 cents from everyone in the country if no one person can reasonably fight it?

Re:That's nice

[MooseTick]

"Did you know I get paid $20 an hour, and you have already used up $2 of my employers time just talking to me?"

They make closer to $50/hour. By the time they pick up the phone and say hello you just cost the govt the $0.25 you lost.

Re:That's nice

[anthony_dipierro]

I guess things are still too antiquated in some banking circles to reduce the transaction overhead enough to allow micropayments. However since their communication is already 100% digital, one would think they could make this happen if only they really wanted too.

Check-21 is a step in the right direction. You can write a check for as little as a penny, all that's needed now is for a single bank to be bold and allow online deposits. Scan your check, front and back, and they'll make a substitute check and deposit it into your account. Of course you'll have to have good credit with them and they'll hold the money until the check clears, but it could very well work today, under the current system.

Of course, creating the substitute check costs money, but probably not more than a tenth of a cent, in bulk.

Already been done by...

[OpenYourEyes]

About... oh... six or eight years ago, there was a company that was founded which had a great online payment scheme that would handle micropayments without problems. Instead of charging a per-transaction fee, it would make money on the float of withdrawing a larger sum from your bank account, not giving you interest on that ammount, and letting you tap into it whenever. Putting money back in your account that was transferred to you could take a couple of days, since they wanted to earn the float money. The company even had a way to do micropayments by beaming data from PDA to PDA, and were planning on a cell-phone version of the same thing. Eventually, they abandoned this system, abandoned the PDA and cell phone systems, and just about abandoned their customers. They switched to a transaction fee system, got bought by a bank, focused on auction transactions, and eventually were bought by eBay. This company was called PayPal.

Re:Already been done by...

[aaarrrgggh]

Fortunately or not, interest rates six or eight years ago were considerably higher than today or two years ago. It's pretty hard to cover per-transaction costs if you can only earn 1% annual interest, especially if you accept that money at a discount by allowing for credit card "deposits."

Re:Already been done by...

[OpenYourEyes]

A valid point, but still doesn't fully address the change.

Yes, they would lose their shirts on credit card fees, but originally you had to hook it up to a bank account, not a credit card number.

They also abandoned the fee-free scheme pretty quickly after they started, so I'm assuming either the initial business plan was terribly flawed and they realized the float wasn't enough - or the bank that purchased it didn't want to encourage fee-free behaviour.

It would also be interesting to shift the credit card transaction charge to the purchaser, instead of the vendor (them, and passed on to some customers) as a way of encouraging bank transactions. But thats now drifting off my original point.

Spam

[Ieshan]

Suppose you required along with your email that people first deposited a .001 cent micropayment to your email provider, or else their email would be bounced. This cash would be deposited in your "email account", and you could use it to send .001 cents to other people. So, if you emailed back and forth between two friends, your net loss would be zero (B sends .001 to person A, person A sends .001 back to B).

Now consider spam. If spammers had to pay .001 cents for every email, and they send out hundreds of thousands of day, that's 100s of dollars wasted on micropayments. Up the micropayment to .01 cent, and the mass emails to a million a day (not unheard of), and you're dealing with tens of thousands of dollars in spam overhead. That's a lot, and not easy to recoup by selling product. It makes spamming unfeasible.

The idea is a little like putting re-usable postage stamps on your email. Instead of paying a tax, you're paying an assurity that you've enclosed a totally insignificant monetary sum along with your email.

People would probably be able to whitelist certain accounts, so that they could recieve mass mails from the University, and from Sport Teams, and from their family. But ideally, it wouldn't matter, becuase the payments would be so small, it would only affect those doing craaaaazy amounts of mass mailing.

Re:Spam

[Ieshan]

Of course, that should be .001 dollars, .01 dollars, etc.

Re:Spam

[Tony Hoyle]

Been tried.. wouldn't work.

1. Who would collect these payments? You really think a spammer in korea would pay them? The ISP? I don't use my ISPs mail system (neither do spammers, btw.)
2. Mailing lists... LKML would go bankcrupt in about a day.

Re:Spam

[PhilHibbs]

2. Mailing lists... LKML would go bankcrupt in about a day.

When he wrote "People would probably be able to whitelist certain accounts, so that they could recieve mass mails from the University, and from Sport Teams, and from their family", I doubt that he meant that this could only apply to Universities, Sport Teams, and families.

Re:Spam

[Sancho]

1. PayPal, or whatever micro-money-management service everyone agrees to use. And I don't think a spammer in Korea would pay them either, but they'd be blacklisted if they didn't.

2. This would almost have to start out on the client with un-paid e-mails being either dumped in the bit-bucket or used as another factor in a Spamassassin-like filter. As more people began using it, it could theorhetically be an authentication on the server so that the bad mail is never delivered to the end user in the first place, which would, of course, cause a problem for mailing lists unless the whitelists were server-side as well.

Re:Spam

[Krystlih]

Problem with this is that people would figure out how to scam collecting all those .001 dollars without resuing them. And how would you convense the world the follow the same rules? Nice idea but I dont think its that practical in today's world.

Re:Spam

[drsquare]

So Paypal gets to make money from every single e-mail sent in the world?

Not only that, but Paypal will effectively CONTROL ALL E-MAIL. I don't trust them with my money, let alone communication.

Re:Spam

[Inkieminstrel]

You advocates a ( ) technical ( ) legislative (x) market-based ( ) vigilante approach to fighting spam. Your idea will not work. Here is why it won't work. (One or more of the following may apply to your particular idea, and it may have other flaws which used to vary from state to state before a bad federal law was passed.) ( ) Spammers can easily use it to harvest email addresses (x) Mailing lists and other legitimate email uses would be affected ( ) No one will be able to find the guy or collect the money ( ) It is defenseless against brute force attacks ( ) It will stop spam for two weeks and then we'll be stuck with it (x) Users of email will not put up with it ( ) Microsoft will not put up with it ( ) The police will not put up with it ( ) Requires too much cooperation from spammers (x) Requires immediate total cooperation from everybody at once (x) Many email users cannot afford to lose business or alienate potential employers ( ) Spammers don't care about invalid addresses in their lists ( ) Anyone could anonymously destroy anyone else's career or business Specifically, your plan fails to account for ( ) Laws expressly prohibiting it (x) Lack of centrally controlling authority for email ( ) Open relays in foreign countries ( ) Ease of searching tiny alphanumeric address space of all email addresses ( ) Asshats ( ) Jurisdictional problems (x) Unpopularity of weird new taxes (x) Public reluctance to accept weird new forms of money (x) Huge existing software investment in SMTP ( ) Susceptibility of protocols other than SMTP to attack ( ) Willingness of users to install OS patches received by email ( ) Armies of worm riddled broadband-connected Windows boxes ( ) Eternal arms race involved in all filtering approaches ( ) Extreme profitability of spam ( ) Joe jobs and/or identity theft ( ) Technically illiterate politicians ( ) Extreme stupidity on the part of people who do business with spammers ( ) Extreme stupidity on the part of people who do business with Microsoft ( ) Extreme stupidity on the part of people who do business with Yahoo ( ) Dishonesty on the part of spammers themselves ( ) Bandwidth costs that are unaffected by client filtering ( ) Outlook and the following philosophical objections may also apply: (x) Ideas similar to yours are easy to come up with, yet none have ever been shown practical ( ) Any scheme based on opt-out is unacceptable ( ) SMTP headers should not be the subject of legislation ( ) Blacklists suck ( ) Whitelists suck ( ) We should be able to talk about Viagra without being censored ( ) Countermeasures should not involve wire fraud or credit card fraud ( ) Countermeasures should not involve sabotage of public networks (x) Countermeasures must work if phased in gradually (x) Sending email should be free ( ) Why should we have to trust you and your servers? ( ) Incompatiblity with open source or open source licenses ( ) Feel-good measures do nothing to solve the problem ( ) Temporary/one-time email addresses are cumbersome ( ) I don't want the government reading my email ( ) Killing them that way is not slow and painful enough Furthermore, this is what I think about you: (x) Sorry dude, but I don't think it would work. ( ) This is a stupid idea, and you're a stupid company for suggesting it. ( ) Nice try, assh0le! I'm going to find out where you live and burn your house down!

Re:Spam

[jim_v2000]

What about people who run their own mail servers?

Re:Spam

[Reziac]

I think the first reply is correct, wrt email vs spam. Micropayments do nothing useful and may even be harmful.

However, I can see other uses. Say you e-publish a book. You could charge a penny per page viewed. So if someone reads all 500 pages of your new novel, they pay $5.00 total. If they decide it sucks and leave after 3 pages, they pay 3 cents. If it's a reference work and they need to see only 30 pages worth, they pay 30 cents (the index and TOC should be exempt, and smart authors will also exempt payment on sufficient teaser material to encourage further reading).

This system creates automatic flexibility (don't need to pay for more of a reference book than you actually used) AND "get what you pay for" (if you don't like the book, you simply stop reading AND stop paying).

Yeah, there would be a certain amount of "cheating" but for the most part it would work, especially with reference books where people need the info this instant, not whenever they chance to warez it.

And has been oft-discussed, 10 cents each is a price almost anyone would pay for MP3s, and at that price it's not worth the bother to hunt 'em down via filesharing.

Re:Spam

[IpalindromeI]

Ouch. Next time try using the "Plain Old Text" option when submitting.

scam.. expensive.. what else comes to mind?

[Exter-C]

seems overly expensive for "micropayments"..

Actualy, it's more like:

[autopr0n]

Each person transfers in large chunks of money, and then paypal only needs add money to one account and subtract it from another. They'll probably use simplified record keeping on the micropayments, and set a limit of the total amount you can send each month.

(dealing with money, they're going to have to keep good records, for legal reasons but they can probably get away with letting people spend $20-$50 a month would be OK. Who's going to sue them for $50?)

Then, paypal will seize the all the money for themselves.

Re:Actualy, it's more like:

[QMO]

"Who's going to sue them for $50?"

Someone will sue for $3.27 plus $32,700,000 for "mental anguish."

Nice! Now only if...

[Regnard]

PayPal can expand their services to more countries...

Re:Nice! Now only if...

[1s44c]

PayPal can expand their services to more countries...

So they can shaft their customers on a more global scale...

PayPal can't be trusted, not with 1 penny in any currency. Check out paypalsucks.com

Re:Nice! Now only if...

[mparaz]

There was talk about having a PayPal Philippines, but it turns out to be just an offshore call/BPO center.

Paypal == Evil

[1s44c]

Sooner or later paypal shaft everyone they deal with. They are the SCO of the banking world.

They freeze funds and keep the money whenever they feel like it, they take random amounts out of peoples credit cards whenever they feel like it, and they send a pack of lies to their debt collection agencies about their own customers whenever they feel like it.

Warning from real life experience, DON'T DEAL WITH PAYPAL!!

Re:Paypal == Evil

[AaronLawrence]

Good grief. The picture simply is not as simplea s you say. Sure, Paypal do some seemingly random things. But in reality, that is the only way they can provide the service for the low fees they charge: automated fraud checks and balances, minimal customer interaction, try to do as much online as possible.

Moneybookers is an alternative, but it has been so little used compared to Paypal that honestly we have no idea whether they are any better.

So basically, you can either have Paypal as it is now, complete with occasional account freezes and inconvenience, or nothing at all, because it would not be profitable for Paypal to operate with lots of manual intervention and careful checking like a bank unless they put their fees up, like a bank.

Yes, I have been a "seller" with both Moneybookers and Paypal. Paypal never froze my account, but they did cause me some confusion over a credit card. It was annoying, but I can see why they did it. Moneybookers only resulted in one single transaction compared to hundreds from Paypal, and had no problems.

Re:Tell me more?

[jhalme]

Well, the SA servers are now back online again so you can read Lowtax tell the story himself;

http://www.somethingawful.com/

Paypal not available worldwide

[zotz]

I live in the Bahamas and want paypal but we can't get it here. Global markets indeed.

all the best,

drew
--
http://www.ourmedia.org/node/44851

Re:Paypal not available worldwide

[blackicye]

" I live in the Bahamas.."

Stop..right there. You lucky Sonuvabitch.

You don't want paypal. I'd much rather be living in the Bahamas.

Re:Paypal not available worldwide

[zotz]

Hey, what can I say?

Ya born dere, ya born dere!

all the best,

drew

--
http://www.ourmedia.org/user
Some by-sa pics from the islands.

Re:Paypal not available worldwide

[zotz]

Oops, got logged out from ourmedia witout realizing it.

Here it is:

http://www.ourmedia.org/user/17145
by-sa pics from the islands.

all the best,

drew

Should I welcome or fear micropayments?

[rolfwind]

Hm... when it comes to when micropayments online - say a penny per transaction - should I welcome or fear this development?

How many free services/sites will start charging cash to use their services (a penny per page view) that will seem cheap at first view (it's only a penny!) but will start nibbling away at your wallet over time.

Just a stray thought.

Is this NEW?

[dpbsmith]

I haven't followed all the various changes in PayPal's offering, but when it was originally introduced, one of the scenarios they explicitly mentioned in their FAQ was one in which you sent a nickel to each of a hundred friends.

When you sent the nickel, they would hit your credit card for $5, your friend would get a nickel "in" their PayPal account, and you'd end up with $4.95 "in" your PayPal account. The next 99 nickels would all come out of your PayPal account.

Haven't you been able to do this all along?

This has been done by peppercoin

[FuzzyDaddy]

Peppercoin has already worked out a way to cheaply (i.e. transaction costs are much less than 1 cent)and securely do micropayments.

Re:This has been done by peppercoin

[AaronLawrence]

Maybe, but have you read anything about them? They require a custom XML application (server program? can't tell), don't currently accept any international charges, don't seem to accept online signup, and by implication are only suitable for large merchants with lots of customers.

In other words, useless for 99% of Paypal's customers.

Re:But...

[AndreiK]

I'm almost positive they don't charge anything for the actual deposit to the bank account.

And while they're at it...

[HerculesMO]

Why don't they allow us to set up accounts that take in money for charities, without charge? I mean, I have a website with over 8000 users, and I wanted to start a drive to collect money for the hurricane relief to donate to the Red Cross, but if I set up an account using PayPal, they'd charge me a bunch of money, taking away from what we would want to donate. I only wanted to have it set up for my site to show that my small community of members can make a difference, but unfortunately I ended up putting a link to Amazon's donation site which doesn't charge anybody anything for that donation.

Re:And while they're at it...

[Fantastic Lad]

I mean, I have a website with over 8000 users, and I wanted to start a drive to collect money for the hurricane relief to donate to the Red Cross, but if I set up an account using PayPal, they'd charge me a bunch of money, taking away from what we would want to donate.

Yeah, or they'd block your account altogether.

-FL

Mod UP Parent!

[1s44c]

Paypal have been freezing funds of private sales and keeping the money for years now. It's amazing how they have gotten away with it for so long.

Maybe this whole thing is just a scam to collect more credit card numbers to abuse.

micropayments eh?

[Itanshi]

http://www.betanews.com/article/PayPal_Blocks_Hurr icane_Relief_Funds/1125880826betanews

mm just playing Devil's advocate and wondering why this wasn't on slashdot yet (correct me if you wish)

Re:micropayments eh?

[cherokee158]

Has anyone tried Something Awful's site today? It seems to be down...wonder what the story is?

Re:micropayments eh?

[Itanshi]

eh check the article, they are based in NO or near enough, they made the paypal cause of this. they are down like many.

Context

[chhupa_rustam]

Hardly a small problem -- in fact, VCs everywhere have been desperately looking for someone to fill this niche. That it's an established player, PayPal, that makes it first to the scene is understandable, but something entrepreneurs should put down as a missed opportunity. For context, the issue of micropayments was addressed by two other /. favorites, Business 2.0: http://www.business2.com/b2/web/articles/print/0,1 7925,1096807,00.html/ and Paul Graham: http://www.paulgraham.com/bronze.html/ Back to the drawing board...doh!

Re:Tell me more?

[C0C0C0]

Just go to their site: http://www.somethingawful.com/.
It's front page news, there.

Mail them a check or money order?

[FatSean]

I mean, being a lazy POS is no reason to support a fucked up business model in my mind.

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It's difficult that's why

[homeslice3]

Back in 2001 I signed up for a long distance provider online and got 3 cents a minute for all calls on my LAN phone. I rarely use it for LD (use my cell), so 4 1/2 years later, I've accumulated $3.11 of long distance phone calls - the provider won't run my credit card until I reach 5 bucks of charges.

Each month I get online (no paper) bill from them telling me I'm going to get billed some day.

Clay knew the answer five years ago

[sootman]

Still amazing that in 2005 nobody has figured out a way to make it simple to charge a penny on-line.

The problem is not an inability to ship pennies. The problem is that users don't want micropayments and they never will. (Where 'micro' is in the penny/nickel/dime neighborhood.)

"...micropayments create a double-standard. One cannot tell users that they need to place a monetary value on something while also suggesting that the fee charged is functionally zero. This creates confusion - if the message to the user is that paying a penny for something makes it effectively free, then why isn't it actually free? Alternatively, if the user is being forced to assent to a debit, how can they behave as if they are not spending money?

"Imagine you are moving and need to buy cardboard boxes. Now you could go and measure the height, width, and depth of every object in your house - every book, every fork, every shoe - and then create 3D models of how these objects could be most densely packed into cardboard boxes, and only then buy the actual boxes. This would allow you to use the minimum number of boxes.

"But you don't care about cardboard boxes, you care about moving, so spending time and effort to calculate the exact number of boxes conserves boxes but wastes time. Furthermore, you know that having one box too many is not nearly as bad as having one box too few, so you will be willing to guess how many boxes you will need, and then pad the number.

"For low-cost items, in other words, you are willing to overpay for cheap resources, in order to have a system that maximizes other, more important, preferences. Micropayment systems, by contrast, typically treat cheap resources (content, cycles, disk) as precious commodities, while treating the user's time as if were so abundant as to be free."

Bonus article here.

Re:Clay knew the answer five years ago

[Bat_Masterson]

Clay is ignoring the value of a penny to both the retailer and the customer.

Donations Too

[Anonymous Coward]

I find I don't have enough money to donate and if I do donate what I have it's absorbed up in Fees.

I'd donate $0.02 to a few projects I like if I could (currently you'd need to donate over $10 to make it worth your while because of the fees).

Re:Spam, SpamAssassin, DigiCash

[Buttonius]

Using an digicash-like micropayment should be simple to implement. The SpamAssassin program would "deposit" the digicash that came in the mail header into the recipient's account and reduce the spamminess score of the message (if the bank flags it as "counterfeit" the spamminess score would increase) . You might need some method to prevent "theft" of the digicash by mail relays...

Sounds like a great use for digicash to me.

another requirement

[SethJohnson]

In this utopian dream of charging for email, I'll also add that whitelists would need to be maintained which track users who don't get charged, or have their fee refunded. This would allow people to continue to run listserves and the like without it costing any money. The listserve would also need to track which members aren't refunding the mail fee and drop them from the list. The fee would really only be needed for mail recieved from anonymous senders.

Can't hurt to dream.

Seth

Not complex

[tfcdesign]

Anyone could charge a penny online, but either the fees would be an outrageous percentage or the service would not make any money.

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Processing

[certel]

I work for a credit card processing agency and we deal with all the backend processing from the information provided by Paypal. The problem with processing $0.01 is that after Visa or Mastercard takes their cut and then we take our cut, their might be only a three quarter of a cent left. It would take a lot of sales to make any type of profit.

Re:Tell me more?

[toad3k]

Fark linked to sa's post, and in the comments there are a surprising amount of people with bad experiences.

http://forums.fark.com/cgi/fark/comments.pl?IDLink =1653706

And of course there's always the venerated paypalsucks.com

Overblown

[Jeff Molby]

Micropayments have significant challenges, but I don't think this is one of them. It's every bit as expensive for me to dispute few pennies as it is for them to resolve the dispute. I've been known to throw away pennies when cleaning because I didn't care enough to find a jar.

Certainly, I would file a dispute if a pattern of overcharges arose, but I doubt I would even take the time to go over my statement unless it amounted to more than $5/month.

Are there really people here that value their time at a couple pennies per minute?

Re:Overblown

[djmurdoch]

Are there really people here that value their time at a couple pennies per minute?

Just curious, how much do you get paid to read Slashdot? Does your boss know that's what he's paying you to do?

Seriously, some people view complaining as entertainment. It's entertaining for them (okay, I admit it, for us), but not so entertaining for the company.

Re:Overblown

[Jeff Molby]

I'm on my lunch break, but nice try.

the problem with micro payments..

[minus_273]

is that they cost money. These days people are so used to getting everything for free on the internet. It is like mp3s, people are so used to getting them for free, that the transition to a payment system is incredibly difficult. There are going to be people who will resist any form of payment (everything should be free crowd) and there will likely be mirrors of any sites which require payments. Consider the fact that people hate the NYTimes registration even though that is totally free. It is only a matter of time before a bugme not equivelent is created for pay sites.

More than that

[JavaRob]

I think nobody wants to BUY anything for a penny, either. Or -- they don't want to make hundreds of tiny purchases. No matter how easy it is. All micropayments do is *discourage* you from using a service more -- because every little thing you do will cost you money.

Think about it -- what do we have in the real world that works in micropayments? The closest thing I can think of is phone service (where each minute of long distance costs you 7 cents, or whatever).

And most phone companies are trying to AVOID the metered usage model, because people don't like that realization that as they're talking, that money is draining slowly out of their pocket. So - unlimited local calls, free nights and weekends, etc. etc.. The more you talk the more value for your money you get... so this kind of plan gets people in the habit of using the phone for long stretches of time. Then they're willing to pay more (since they feel like they're getting more!), and the usage habits transfer to the standard metered hours.

But now think about a nascent online service. What's bad for a basic, necessary service like phone is HORRIBLE for brand-new, NON-commodity service. An online service needs to do everything it can to encourage you to use it more, to use it all the time, to incorporate it into your life. That's where the money will eventually come from -- people who feel they're getting a lot of value out of it. Nickel-and-diming you to death (and anything that gives you that feeling -- no matter how cheap it is in the end) is the exact opposite of what they need to do.

I haven't thought this through far enough to figure out the ideal alternative -- maybe cheap year-long (unlimited) subscriptions to networks of sites? -- but I feel like micropayments will always give me a bad feeling.

Re:More than that

[ZorbaTHut]

maybe cheap year-long (unlimited) subscriptions to networks of sites?

http://www.graphicsmash.com/
http://www.girlamatic.com/
http://www.moderntales.com/

Seems to be working for them. :)

(I'm subscribed to the first and the third at the moment.)

Re:More than that

[Rirath.com]

I think nobody wants to BUY anything for a penny, either. Or -- they don't want to make hundreds of tiny purchases.

Quite, but I'd be far, far more willing to make voluntary micro-donations on a regular basis (per good comic, per software version) rather than micro-payments.

Re:More than that

[anthony_dipierro]

Think about it -- what do we have in the real world that works in micropayments?

Newspapers are pretty cheap. Maybe not micropayments, but smaller payments than is feasible with paypal. Soft pretzels, snacks, soda machines, laundry machines, video arcades, there are a lot of small payments now that I think about it. But for the most part, we don't need micropayments as much in the real world, especially for services. In the real world there isn't time to deal with even ten thousand people a day. Online, it's trivial. Also, in the real world it's a lot easier to trust someone, at least to some extent. And that's really what money is about in the end, it's just a distributed trust mechanism.

I can tell you why you can't spend a penny online

[manno]

"Still amazing that in 2005 nobody has figured out a way to make it simple to charge a penny on-line."

That's because they're worthless, it literally takes 100 of them to equal 1 dollar, 100. It takes

300 pennies just to buy a cup of coffee.

10,000 pennies for dinner and a movie (Miami)

50,000 pennies to buy a Mac Mini

1,200,000 pennies to buy a cheap car

3,100,000 pennies to go to a private college for a year (Miami)

25,000,000 million pennies to buy a house in a bad neighborhood (Miami)

Who want's to go through all the trouble and expense of collecting penny payments, just to split one cent with a stranger?

Penny-level Micropayments as an income source?

[Andrew Lenahan]

It's already fairly obvious why "penny" micropayments haven't been embraced by consumers (inconvenience, privacy, annoyance factor) as well as why they're unattractive to transaction service providers (costs of disputes, etc.).

Much rarer are discussions of the topic from the content-creator's (artist/writer/cartoonist/musician/poet/whatever) point of view. Minimum wage is roughly $5/hour in the US and $10 in the UK. You'd need 500-1000 visitors paying a penny EACH HOUR just to equal the princely sum you'd make behind the grill at McDonalds. And that isn't even figuring in the transaction fees, advertising, taxes, hosting fees, bandwidth, DRM, software, customer service, etc. Obviously, not an attractive concept to most artists.

One response might be "Okay, you won't make much, but it's better than giving it away!" Not necessarily. Free content has a great deal of fluidity: it can be linked, quoted, forwarded, blogged, passed around the office, etc. Achieve a certain level of success in offering free content, and one can make up a tidy living selling merch and other residuals... Homestarrunner is a good example of this business model.

Given the staggering amount of transactions needed just to compete with minumum wage, I can't see penny or nickel-level micropayments ever taking off.

Re:Penny-level Micropayments as an income source?

[ngkdc]

You may work behind the grill at McDonalds for 8 hours but the web site will work 24x7 ... AND you can continue to work at McDonalds.

I think the next step is profit.

***

Neither flame nor funny bait - - - just an observation.

Re:Penny-level Micropayments as an income source?

[Andrew Lenahan]

I both agree and disagree with your statements.

In theory, the web is 24/7, but I've noticed that web traffic seems to more-or-less follow business hours. I'm sure there's some variance there depending on the type of site, etc, but I've always had noticably more hits at 12 noon than at 3AM, and always less on major holidays. There's also a little less traffic on the weekends. The web does work 24x7... but sometimes it works harder than others.

As for "AND you can continue to work at McDonalds", I suppose that would depend on the type of content. Content certainly comes in every imaginable shape, size, and quality. If we're talking content that is actually paid for, I think it's safe to say that we're not talking about extremely quick-to-make content. To go back to my Homestarrunner example, I've heard that it's basically a full-time job for two people to make a cartoon of that quality each week, and the creators presumably couldn't take a second job at McDonalds even if they wanted to (for some free fries, maybe). And keep in mind that while a lot of people like Homestar, it's debatable how many would actually pay for it each week. If they took considerably less time in making it, quality would suffer, and even fewer people would be willing to spend money and time on it.

OT - Re:What good is micropayments...

[Cheerio Boy]

(Score:0, Redundant)

It wasn't fscking redundant when I posted it moderators.

And the question still stands - what good is adding another service to PayPal when they can't even get their existing services, dispute system, and watchdog stuff to work right?

Solutions for micropayments

[breakbeatninja]

I believe there are a couple, actually and this is one of them: http://www.centipaid.com/

Bring Out Your Goods!

[blueZhift]

Arguments about transaction costs and whether these are truly micropayments aside, I guess now is the time to bring out the goods. Your garage band mp3's, artwork, games, whatever. This might make setting up a bazaar like those in online games like Final Fantasy XI something worthwhile. The bonus is that digital goods never need to be replenished. Hmmm, sounds like a new project for the coming weekend!

Old news!

[Electric Eye]

Um, this stuff was reported last Thursday. Did you guys just wake up??
http://ecommerce-guide.com/essentials/paypal/artic le.php/3531571

Disputes: its not the amount, its the principle

[G4from128k]

Are there really people here that value their time at a couple pennies per minute?

Sadly, the answer is yes. I've a friend who is very intelligent, well paid, and otherwise normal. But every year he spends hours filling out the "petroleum depletion allowance" form for the IRS because its gets him back about $1 (his house has some microscopic percentage of some mineral rights). And I know another business associate who drove across town rather than pay postage to mail something.

I have no hard data (except for a 2001 article suggesting that 1 in 37 online transactions has a charge-back and 1 in 100 are fraudulent), but I'd bet that a sizable fraction of the population would dispute ANY anomalous charge no matter how small. Such people would view the spurious charge as theft and dispute it. "It's the principle of the thing" that motivates these people. Sure, some people, such as yourself, do the personal math and decide its not worth it. But others, many others, are driven by principle, not rationality.

Re:Disputes: its not the amount, its the principle

[Jeff Molby]

True, but it's self-limiting. These people will be too busy counting pennies to incur many charges.

Re:Disputes: its not the amount, its the principle

[patio11]

And after you get a lawyer in the loop, game over. Two words: "class action". If your company enables a micro-fraud against, say, 1% of your million users, thats a certified class of 10,000 (or more -- anyone who answers their ad in the paper will be certified, because no one will bother using the money to check -- see the CD price-fixing settlement), and if you even inflicted a few pennies per user worth of damages the punitive component of the award will wreck you. (With, naturally, the first third going to the lawyers and the harmed users collecting nigh-valueless coupons.)

micropayments

[mtibbitts]

The success of micropayments is still a chicken-and-the-egg problem. Until there is a ubiquitous system out there few vendors will use one. Until vendors do so, few customers will bother with it. Who has the strengh to make it happen? I would be surprised if paypal were to make this work, as they lack right types of vendors. Were Google to come out with a system, it could have a chance...after all, they already do micropayments, of a sort: pay-per-click advertising. Who is the biggest loser here? The LEC Billing industry for blowing the opportunity to have micropayments build into consumers' local phone bills. By the time the RBOCs wake up and see the opportunity here, somebody else will have found a better solution. Martin Tibbitts

Re:A Useful Monopoly

[ScentCone]

PayPal charges exuberant percentages to small transactions

Yes, because it costs them a LOT on small transactions, to interact with Banks, card processors, and the like. They have to leave a permanent accounting trail for every one of those transactions, hold up to audits and the scrutiny that any publicly held company must be able to support. But the whole point of the article in question is that they (eBay's PayPal unit) are looking at ways to specifically support micro-sized payments in a way that won't put such a burden on them or the other two participants in the transaction.

and has a history of "locking funds" randomly with no explanation.

Actually, the people who complain the most loudly about this are usually the people who (shockingly!) are getting complaints from their own customers, or are having charges disputed. Doesn't matter, because it's a tiny, tiny percentage of the millions and millions of transacitons they handle. The rate of charge-backs and fees charged by "normal" credit cart processing companies is as high or higher, and most people that use PayPal when they put up an auction on eBay, etc., would never qualify as a card-taking merchant, and if they did, would be in the high-risk category, and lose an even higher percentage of their transactions to the banks that float the money for them.

are, for all piratical purposes, a monopoly.

Well, that's just not true. There are hundreds of other auction and 1-to-1 online selling sites and systems out there (you know, tiny little outfits like Yahoo, Amazon). eBay is successful because they had a good idea early on, and spent a fortune investing in it. Are you thinking they should be hated for being successful? What leverage does eBay have over you, or what choices do they keep you from making, and how is it that they are keeping you from launching your own auction system? And of course, there's absolutely no reason two people wrapping up a transaction on eBay have to use PayPal - but no one else has managed to stay profitable trying to run something similar, so they fail. In the meantime, a merchant using eBay is welcome to charge cards through any of thousands of other channels, or take a check or wire transfer, or even use a third party escrow service. PayPal is simply convenient and well integrated into eBay's process... as well it should be for what they've spent on it.

FTC / CNN?

[PW2]

I hope someone emails this info to their friends at FTC / CNN / ETC.

easy

[llZENll]

"Still amazing that in 2005 nobody has figured out a way to make it simple to charge a penny on-line."

charging and keeping track of if the balance was paid is the easy and cheap part, the hard/expensive part is actually collecting the penny. you can thank our countries monopolistic scam of a credit card system for that, which everyday rapes and pillages our economy with millions of tiny plastic cards...

There exists a viable epayment method...

[NNland]

It's available at affini.com . You have to send at least as much as the recipient requires, but there are no transaction fees (but a minimum $20 balance to pull money out via Paypal).

Obligatory...

[Cereal Box]

Still amazing that in 2005 nobody has figured out a way to make it simple for Slashdot editors to check for dupes.

Re:Tell me more?

[JourneymanMereel]

In PayPal's defense, there are a lot of people out there running scams claiming to be raising money to help the hurricane victims. After raising substantial amounts of money, they keep it rather than donate it. Unfortunately, things like that happen anytime there is a need. Something Awful may very well be one of the excpetions, but how is PayPal supposed to know that. I'm guessing based on his comments that he most likely was fully intending to give the money to the Red Cross while rewarding those who donated with free stuff he already had sitting around. It's unfortunate, but I can certainly understand why the account would be flagged as suspicious and shut down.

On the other hand, not allowing money to be given to the Red Cross because "the United Way is PayPal's relief organization of choice" is just plain rediculous!

So...

[soft_guy]

It looks geared to be the under $2 area and not the couple of pennies area, so I think calling it "Micropayments" is a bit much

So when the service of making payments in the range of 1-5 pennies becomes available, we'll have to call it "nanopayments".

PayPal's Problem is...

[mpapet]

That they have to connect to the current banking transaction system.

Put aside PayPal's internal problems for a minute and consider this.
As many posts have shown, there are micropayment alternatives out there. Here's a summary of the issues binding micropayments.

1. Cost Centers:
Where most of micropayment clearers will fail is when they have to interact with a bank. Getting hooked into the payments clearing back-end is not "free" like processing a P2P type payment.
Therefore one financial hurdle to get over is getting value INto one of the many micropayments environments.

3. Market Model Front End:
Prepaying $20.00 at a time makes sense, but it's viewed as too big a commitment for most consumers. Add to that, the payment transaction costs at $20.00 are high, so the micropayments company sees a good chunk of that $20 go to the payment clearer.

4. Market Model Backend:
Now let's say a bank that already clears payments makes a micropayments product. They will go through their usual channels which is to sell the system to a reseller who then goes out and finds all the little companies that might want it. The basic point here is that the current market has intermediaries jacking the transaction costs up and there doesn't appear to be a direct model innovator.

Finally, it would be interesting to know how Apple gets around the problem with iTunes and .99/track sales.

So there's too many inefficiencies in play for a "real" micropayments system to work.

So why no aggregation?

[fm6]

The key to the micropayment game is aggregation of volume . If your company is processing 2000 payments per day of $0.01 each from 2000 different people, it's probably costing you more than it's worth. However, if you're processing five million payments a week with an average individual's cost being around $0.25, you might be breaking even. If you could get two dozen major sites and hundreds of smaller ones on board, you might make money.

That's a pretty good assessment. So if we accept all you've said, we have to ask: why has nobody tried to do this? There are dozens of online content providers struggling to make a living off of advertising and subscriptions. You'd think a few of them would get together and form a micropayment consortium. So why haven't they? Failure of imagination? Intimdation by existing transaction processors (mainly banks)?

That last one is my pet theory -- though I should hasten to say that I have absolutely no evidence to back it up. Banks make huge profits off of credit/debit card transactions. I mean, 3% on most online transactions and a lot of old-fashioned transactions. You don't see it on your bill, because retailers aren't allowed to break it out, but you are paying it. It's a scandal. Imagine the reaction if they tried to impose a 3% national sales tax. And yet we're already paying one!

If there were a working micropayment system with transaction fees low enough to make penny transactions feasible, it would soon be adopted by retailers on the non-micro scale. Not something the banks would like to see!

Re:So why no aggregation?

[shmlco]

Everyone knows that whoever does it will score big on transaction and service fees, and everyone wants to be that person, but since you need banks, credit cards, sites, payment and processing centers, administration, and software (browser integration), no one person can be that person. And above all, no one wants to cooperate with someone who could end up being that person... instead of them.

There's also the not-so-minor issue of fraud to deal with. As an example, look at how many people game Google's pay-per-click ad system.

Re:So why no aggregation?

[anthony_dipierro]

So if we accept all you've said, we have to ask: why has nobody tried to do this?

Actually, a bunch of people have tried it. No one has really succeeded, unless you count e-gold. The problem is getting the people together, for one thing, but...

There are dozens of online content providers struggling to make a living off of advertising and subscriptions.

I don't think micropayments are a good substitute for advertising, and don't have much of an advantage over subscriptions. People want to know what they're getting before they pay for it, especially if they're paying for it on a piece by piece basis. And in the time it takes to click "OK, send the $0.01", you could have turned off the ad anyway if it was that annoying.

Where micropayments have their real advantage is in person-to-person payments, and to a lesser extent in site-to-person payments. For the latter, e-gold is already being used by a number of "make money by reading email" sites and the like. I don't think there are nearly as many people who would be willing to pay $0.01 to read a Slashdot article as those who would like to be paid $0.10 for submitting an accepted Slashdot article (or $0.01 for one of the first 10 Score:5 posts). And with person-to-person payments, the possibilities are even greater. Need help with a bug you just got running a Makefile? Want a search engine expert to help you find the answer to a difficult problem? Micropayments could be great for this.

The problem is, it's a lot harder to get the critical mass for these things.

That last one is my pet theory -- though I should hasten to say that I have absolutely no evidence to back it up. Banks make huge profits off of credit/debit card transactions.

Well, there are a lot of regulations, most of which were pushed through by the banks, and which Congress was happy to oblige in these terrorism days. But AFAIK the regulations don't really start to kick in until the transfers are more than $600. I'm not sure, though, I mean even Paypal requires you to give a lot of detailed personal information, and last time I checked (a long while ago), they weren't even a bank.

If there were a working micropayment system with transaction fees low enough to make penny transactions feasible, it would soon be adopted by retailers on the non-micro scale.

I'd say e-gold qualifies. Maybe not penny transactions, but it's definitely feasible to pay a nickel with. The problem is getting your money into the system, and the fact that just about no one accepts e-gold once you've put your money in there.

Who checks the long tedious bills for slamming?

[UnapprovedThought]

it would be feasible for me to access more pay content without putting a hole in my budget

That's until you start getting nickel-and-dimed by a bunch of sites that you don't remember ever visiting (similar to slamming on the telco network). Like popups and popunders, some of the paying sites will load themselves, claim that you were the one who initiated the purchase (when it was really just a client-side script) and help themselves to your funds.

So you'll have this really long bill to audit with millions of little payments that you don't have time to figure out if any or most of them are accurate or just added there to siphon some extra cash out of you, many of them hoping they fall below your consciousness radar, where you strain your memory but you can't prove you didn't make them and so you don't do anything about them.

Then, let's say you want to dispute some of the charges. You may spend 2 hours on the phone just trying to get $10 back, going one little charge at a time.

This seems like a scheme where it'll be easier for you to give away money than to hold a disparate group of strangers to a fair deal. That will only help the hucksterism to grow. So what if they can only grab a few cents here and there? Multiply this amongst millions of customers and pretty soon you're talking real money. Real money means real lobbying, so I hope this never reaches the status of an "industry" (complete with legislating privileges) or we will be hobbling on this bad foot for a long time.

Re:Who checks the long tedious bills for slamming?

[AaronLawrence]

Yeap. To avoid this you need proper security, such as captchas, biometric data, passwords, etc, and that makes the micropayments too much bother to do. Back to square one.

advantages of digital gold/silver...

[nido]

w/ e-gold or e-bullion or pecunix or 1mdc, at least you know what you have - a gram of gold is a gram of gold. Some systems have a storage fee, others (such as 1mdc, based on e-gold) have no storage fee.

What most people don't realize is that you pay a tax for holding government currencies too. It's called "inflation". The government prints more money to pay for their silly little welfare programs & wars, making the money that you already hold less valuable...

Recently read somewhere that it took ~$347 in 1985 to buy what $100 would have bought in 1965 (when the U.S. government started "printing" money to pay for Vietnam).

Absurd

[tmortn]

For Paypal shifting money around internal to its system to have a minimum payment above their transaction percentage. You know the minimum transaction fee bugs me to no end. It essentially is just about having small transactions register as 20+% of profit. 20% of profit on a computerized transaction. That is utterly absurd.

And don't give me some shit about there being a minimal cost of transaction. Someone running a till at a store will not hessitate to take a quarter for a candy item at the counter, or a nickle even in some cases. Why is it that electronic tills are any different ? I don't take up a clerks time, I fill out my information and it is all processed online at the speed of light and cleared nightly again by computers. There IS NO COST OF TRANSACTION. All money made in such trasffer fees is profit.

Ok I take that back. There is a minimum cost of transaction. But when it is all said and done that is the cost of operating the system / ALL transactions processed in a given period. Someone want to try and say that VISA dosn't make enough in 1-2% rake off the top of their world business to make money without 'transaction' fees ?

Re:I can tell you why you can't spend a penny onli

[Bat_Masterson]

Who want's to go through all the trouble and expense of collecting penny payments, just to split one cent with a stranger?

The government??

Think about it...

Good deal up to $8.07!

[Another AC]

For all the people whining about "Paypal still gets 10% of your money for a $1 transaction"!

Hello.. they ALREADY get much more than that with the typical 1.9% + 30 cents fees from before.

What they've actually done is LOWER significantly their fee for all transactions under $8.07:

a $1 transaction the old way cost you $.32 (32%!!)
now it's just $.10 (10%).
a $5 transaction was $.40 (8%), now it's just $.30 (6%).

If you have (or wanted to have) an online business which exclusively charges people $8.06 or less for goods, this is pretty good news!

Nobody?

[anthony_dipierro]

Still amazing that in 2005 nobody has figured out a way to make it simple to charge a penny on-line.

e-gold has been doing it for nearly a decade. (yeah, that's a referral link, I'm shameless)

Re:Penny-sized micropayments v. $-sized dispute co

[anthony_dipierro]

The core challenge for small micropayments is the high cost of dealing with disputes.

The best solution to that problem, for small micropayments, is not to deal with disputes. It's not like you can call the federal reserve when you drop a quarter in the gumball machine and a gumball doesn't come out. When you're dealing with micropayments you've gotta treat it like cash.

Versus what other option?

[WoTG]

10% is not that bad if there is no other practical alternative. Think about it from PayPal's perspective, they're going to handle an entire transaction for only $0.10. My bank will gladly charge me $0.50 for an electronic transaction.

I already paid via DARPA

[Ted Bundy]

Ask what you want, but I already paid the fees from my taxes to DARPA.

Heard about giftfile ?

[wackysalut]

Micropayments is exactly what giftfile is made for, and see by yourself (http://www.giftfile.org/ it seems very promising.

Re:Google Wallet?

[AndreyF]

Ditto. Between that and GTalk - to landline calling, Google coders really need to hurry up and code.

Micropayments made better: Subscriptions

[patio11]

I could go into all the reasons why, but this guy does a much better job of it. In a nutshell, micropayments impose huge transaction costs on the user for not a lot of benefit to them. The successful microcredit businesses, which are mostly classical utilities (phones, electricity, gas), are moving away from the microcredit model. Why should Internet anything start moving towards it?

Note that the most successful micropayment system right now is probably Google adWords. Laugh if you want, they allow users to contribute a trivial amount of real world currency to the author of a website and provide value added to both users and authors without unduly inconviniencing most users. And they do a couple million dollars in business every week.

Re:Stupid idea. Stop pushing it.

[The Fanta Menace]

Yeah, and I already pay tax/insurance for my car - I'm not going to pay more for toll road or car parks.

I refuse to use toll roads and I never use commercial car parks. Frankly, I prefer public transport.

I already paid for my computer - why should I have to pay more to use your software?

I don't pay for software. I use free software

I already paid the cover charge for this club - the drinks should be free now.

I would never consider visiting one of those shitholes

Grow up

Now come up with a rational argument for micropayments, moron.

One Cent Micropayments

[CeeJay27]

There are several micropayment systems that exist today - in 2005. They are all based on the concept of 'aggregation'. It is based on the theory that consumers will buy enough in a period of say a month, to justify such transactions. Some companies that do this are Peppercoin, Clickandbuy, Bitpass (though bitpass is based more on prepaid).

handy link for paypal fees

[roanoke]

Although it doesn't support the new 5% rate yet, here's a very useful site for calculating paypal fees...

http://ppcalc.com/

Lowtax is an idiot

[Apotsy]

I've been reading his sob stories for years. He always follows the same pattern:

1. Attempt to conduct business in some way
2. Discover there are aspects of this task that he hasn't thought of
3. Instead of learning the things he needs to do, he throws a fit and starts in on one of his "everybody in the world is an idiot except me!" rants

He could have avoided his troubles with PayPal, if he had done like this guy says.

That isn't to say that PayPal doesn't suck, but the fact remains: someone else was able to pull it off without a hitch, using the exact same resources that were available to him.