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Micropayments : The Salvation!
Mention micropayments, or payments in general, and a lot of people get very wary: We'll pay $40 per month for our @Home, $30 for our newspaper,
$30 per month in various magazine subscriptions, $10 for a 2-hour movie, $30/month in rentals, but we've become accustomed to everything on the net being free (though as mentioned very, very few things are actually free: You are, unless you're
a hermit and you make your own clothes and get your internet feed by carrying the bits around in a bucket, paying for advertiser driven sites indirectly). We find it troubling to
believe that it could possibly be any other way. On top of that there are idealists galore that, while living under the umbrella of educational welfare (i.e. career students and professors) or enjoying the benefits of a capitalist society while superimposing their socialist idelologies, like to wax poetically about how
everything should be free as in beer, or water, or whatever the silly saying is. However let's cut to the chase: In the old days you'd give me a bushel of wheat and in return I'd dance a jig. Now I dance my jig for someone else and they give me some coins
and I give you the coins for your bushel of wheat. It's not a complex nor evil system...alas, I have digressed. More to the point, whatever you think about the health of the net it is undeniable that this patient is sickly: Numerous advertisement driven sites have closed shop, and many of the remaining ones have vastly scaled back the content. I was at a public library with my wife recently (she's a big fan...don't think I don't see the paradox of being at a library where everything is free with what I'm saying here... ;-]) and we sat in the magazine
section and I started taking in the MASS of magazines there are out there, yet the overwhelming majority of that content doesn't see the light of day on the net, or when it does it is scaled back, images aren't included, etc. It simply isn't financially viable. And when I say financially viable I'm not talking about some evil
McQuack sitting on his piles of cash : I'm talking about hard working writers, photographers, artists, etc., who have to earn a living to pay the mortgage and put the
kids through school. If there was a comic I liked and it cost $0.10 a month to
get my daily dose then I would be very happy to pay and I really believe that
the majority of people are the same way: If the amounts are low enough that it's
less than the money that I throw in the big spare change dish every day, and there aren't ridiculous (or even noticable) transaction charges so I know that the people who actually create are getting the money, then I would feel really good about that.
Anyways the fundamental of micropayments is this:
- Payments can be very small. For example, $0.02.
- Obviously transaction fees have to be very, very low (or this system will not
fly). Already it's quite astounding how society simply accepts credit cards basically imposing a tax on goods we purchase by charging vendors up to a couple % for every CC purchase up front (though often hidden) and then they start the 16% interest rate clock ticking...I'm digressing again. However if the micropayment central is a "Brand Name", or if it's a public company you can be pretty sure it'll
suck off a good portion of the money denying the actual content providers of their deserved portion, so that has to be avoided. I can picture this being the next big hype segment by the way.
I would envision the process operating somewhat as follows (there are parallels with a lot of other systems here):
- Users deposit an amount in a single, centralized
micropayment house. For example I connect up to whatever.com and using my
credit card deposit $20 into my personal micropayment account.
- When a user wants to access a pay site (perhaps for a
certain period of time, ex. 4 hours, or per page, etc.) they note the site's
micropayment merchant number and go to the secure website of the central house
and enters their user info to get into their account. They then authorize the
noted micropayment member (ex. 5958585712) to bill up to $X to their account
within a certain time window at a certain rate per interval (i.e. $2 per day
maximum from February 24th to April 7th to a maximum of $30). They are given a
special authorization number (not their account number). They enter this
number into the micropayment member's site (ex. FAJFHS34129283KDKDLS111),
obviously through scripting or copy/pasting.
- The content provider connects with a standard set of
SOAP/XML calls through a secure layer to the micropayment clearing house with
their merchant number, the authorization number that the user entered, and the
charge amount. The micropayment clearing house replies with the confirmation
that the monies were transferred to their account.
- The user reads pages, watches movies, plays games, etc. If billed at intervals every now and then the site connects again with the same info and requests a new transfer. When the limit is hit it notifies the user who has to do the process over again.
There are several keys that differentiate this from a lot of existing systems. Briefly they are:
- The overhead should be absolutely, positively minimal. The micropayment center is merely an enabler not a great solution unto itself (and it should probably be a cooperative rather than an individual entity). Given that this system should encompass millions of transactions per day the cost per transaction should not exceed even a penny. This isn't rocket science: it's moving A from B to C : B=B-A,
C=C+A. Obviously there are logistics of having a redundant high-speed
connection, and a fantastic amount of security on the central servers, but
that isn't that difficult.
- Unlike a credit card # you aren't giving a content
provider/merchant a blanket ability to bill however they want. Instead you
are specifically giving the amount, the merchant in question, and perhaps even
a date range, and that is ALL the merchant has access to. If the merchant is
hacked any information they have stored should be almost entirely useless. The
micropayment center of course has to operate under extreme security, however
it's easier to secure one site than to secure thousands.
- The user is the god and is in control of all. The
user dictates who gets what, when, and how much. The user dictates how much
information merchants or anyone gets about them.
- Along the lines of low overhead: Anyone should be
able to get a "merchant account" with no muss, no fuss. If people want to use
it to sell MP3s, to get donations, etc., they need to be able to use it. For
such a system to work there has to be few big player micropayment centers so
with one trusted central site I can support and subscribe to many member
sites. There is no justifiable reason why this would have the barriers to
entry that credit cards, for instance, have: Merchants have extremely little
ability to "rip off" users and with such tiny charges chargebacks would be
incredibly rare, if at all an issue.
- This is a low overhead system meaning that while
there's no reason there can't be a full online historical system, etc., users
should not expect mailed statements, nor should they expect to phone Bob the
phone support guy because they can't figure out how to copy paste. If
they want that help they should pay extra. This system cannot
become unusably burderened with overhead that the vast majority of people don't use or care about.
Next: Show Me A Diagram!