HCBE Faculty Articles

Micropayments: A Technology with a Promising but Uncertain Future

Document Type

Article

Publication Title

Communications of the ACM

ISSN

1557-7317

Publication Date

5-2004

Abstract/Excerpt

This article reports that in the context of e-commerce, micropayments are Web-enabled financial transactions in which consumers can purchase online content or services for small amounts, typically defined as purchases of less than $1. Since the mid-1990s, various micropayment providers have attempted to achieve this goal by developing payment processing technologies. Micropayments provide a payment model in which content can be unbundled and sold using a pay-per-view concept. In terms of business needs, micropayments provide a means for merchants and individuals to obtain at least some revenue for content they are presently providing at no charge. The overall business challenge for micropayment providers is to achieve a critical mass of both consumers and merchants. Merchants may be skeptical of their ability to begin charging for previously free content and they may also be concerned with losing revenue by unbundling their products. Consumers may have an inherent preference for flat-rate pricing over metered pricing, and some may merely believe that Web content should be free. Earlier micropayment developers, such as Digicash BV, attempted to bypass the credit card system, using the concept of digital cash.

Volume

47

Issue

5

First Page

44

Last Page

44

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