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Ask HN: Why aren't micropayments a thing?

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61–70 of 194 posts

Re: Ask HN: Why aren't micropayments a thing?

#61
Taxes are a big reason. Consider a site in the US with customers in the US.

Quite a few states require you to collect sales tax on sales to customers in those states. Most have thresholds and you only have to collect taxes if you exceed those thresholds, but unfortunately most of those thresholds are of the form sales of at least $D dollars or at least T transactions.

$D is usually reasonably high, like $100k or $200k, but T is often 200.

So 200 people in South Dakota each pay $0.01 for an article on your site generating a whopping $2 in revenue...but you have 200 transactions so you owe sales tax on that $2. Same thing will probably happen in a bunch of other states.

And so there you are, with tiny revenues from many states, but having to register with their tax authorities, having to file tax reports (quarterly in most cases, but I think some may be monthly), pay filing fees in some (which might be more than your revenue in those states!), and of course actually send the tax money.

Now throw in other countries. There is VAT in the EU, for instance. Most countries have VAT thresholds, but those often do not apply to out-of-country sellers, so you might have to deal with VAT for European that comes and buys one of your $0.01 articles.

There are some things that help with this. In the US there is the Streamlined Sales Tax Agreement, which is an agreement between about half the states where if an online seller agrees to collect sales tax for all sales in all the participating states (even the ones that they do not meet the thresholds for), the states will pay for the seller to use a service like Avalara or Tax Cloud, which will handle the rate calculations, the filing, and all that at no charge to the seller.

But that only covers about half the states. Those services will handle the rest for you, but not for free, so you can't escape tax pain.

With VAT in EU, there is a thing called VAT MOSS that you can sign up for. You sign up for VAT MOSS in one country (Ireland is a good choice for US businesses), and then you just have to file one quarterly report with them listing your sales in all EU countries and the tax owed, pay that tax to the VAT MOSS country, and that country then distributes their shares to the others.

The VAT situation is considerably nicer than the US sales tax situation, because VAT is per country. I just have to know that a customer is in, say, Germany, to know how much VAT to collect. In the US, the sales tax depends on address. 123 Fake Street in a town can have a different tax rate than 124 Fake Street, and the seller is expected to deal with that.

If instead of charging $0.01 per article you make the site free to users and plaster it with ads and make your money from those ads all those tax issues go away. The money you make from the ads is just ordinary business income, that gets taxes as part of your corporate income tax. The tax is the same regardless of whether someone who saw the ad lived at 123 Fake Street or 124 Fake Street.

Re: Ask HN: Why aren't micropayments a thing?

#62
For reference, there's Web Monetization [1] which tries to solve exactly that.

As others have noted it all boils down to user agent support. Otherwise most publishers probably won't consider giving up ad or subscription financed models.

Also, forcing users into subscriptions allows for better demographics data/statistics.

[1] https://webmonetization.org/docs/explainer/

Re: Ask HN: Why aren't micropayments a thing?

#63
Part of it may be the mindset of "paying for something = negative" and "getting something = positive." Micropayments maximize the time we spend thinking about the negative part of the transaction. On the other hand, if we wait too long and have a $1000 bill at the end of the year, that may be even more painful than having to think about smaller payments more often. The psychological sweet spot for many things is the once a month subscription.

Re: Ask HN: Why aren't micropayments a thing?

#64
post #4

Processing a credit card costs $0.02 per card, plus interchange of up to 3%. Debit processing is $0.22 cents plus 0.05%. Both of these are the baseline cost, your merchant processor often won't be able to even get these rates for their own wholesale rates. Now try and build a micropayments ecosystem ontop of this infrastructure that is very expensive to interact with (in the context of $0.01 charges). Amazon can do i…

The answer to this, which I am a little surprised no one has tried to implement (maybe someone has tried?), is to charge the end customer in some larger amount - say $5 or $10, and then draw down the micro transaction amount as you go. So if you could pay $5 a month (or at a time) but gain access to every article, site, video, piece of content etc, and it auto deducts from your balance then you don't have the transac…

This is really just circumventing the problem. As an end user, I don't want my money to be split up in to all of these random pools that private companies have control over.

Re: Ask HN: Why aren't micropayments a thing?

#65
post #4

Processing a credit card costs $0.02 per card, plus interchange of up to 3%. Debit processing is $0.22 cents plus 0.05%. Both of these are the baseline cost, your merchant processor often won't be able to even get these rates for their own wholesale rates. Now try and build a micropayments ecosystem ontop of this infrastructure that is very expensive to interact with (in the context of $0.01 charges). Amazon can do i…

I don't think this is inherently the issue. News sites could aggregate charges and bill you at the end of the month.

I think the bigger issues is that if I see an article presented to me as shared on social media or in search results I assume it is free access. I click in, and if they ask for payment, it's a turnoff since I thought it was going to be free. Also, I don't like how credit card information can be continuously used by the organization.

I want to be able to hand an authorization for a single one-time payment to any organization and not an authorization to charge however much they want, whenever they want.

That goes for hotels too. I want to be able to say "Here's my credit card" [but I don't authorize more than $130/day].

Re: Ask HN: Why aren't micropayments a thing?

#66
post #43

Earlier quoted context omitted.

Isn't that basically how Flattr works?

Kind of? Doesn't Flattr have you choose up front how you want to distribute your subscription? I was imagining a system where you don't have an upfront choice to make, but that as you consume content the subscription is drawn down.

That is how most toll systems work. You load up a balance on the card $10/$20 and it deducts every time you cross a checkpoint.

The difference between this and a micropayment platform would be the fees. In the toll system, the fees are paid once. With a micropayment platform, the fees would be per transaction.

There can be a "self hosted" version of such a platform that say each content-provider can host but I am not sure it will work out against the cost of maintaining it includes much more than just hosting (securty, auditing, refunds, taxes etc).

Re: Ask HN: Why aren't micropayments a thing?

#68
post #4

Processing a credit card costs $0.02 per card, plus interchange of up to 3%. Debit processing is $0.22 cents plus 0.05%. Both of these are the baseline cost, your merchant processor often won't be able to even get these rates for their own wholesale rates. Now try and build a micropayments ecosystem ontop of this infrastructure that is very expensive to interact with (in the context of $0.01 charges). Amazon can do i…

The answer to this, which I am a little surprised no one has tried to implement (maybe someone has tried?), is to charge the end customer in some larger amount - say $5 or $10, and then draw down the micro transaction amount as you go. So if you could pay $5 a month (or at a time) but gain access to every article, site, video, piece of content etc, and it auto deducts from your balance then you don't have the transac…

>charge the end customer in some larger amount - say $5 or $10, and then draw down the micro transaction amount as you go.

Wow, I just realized why Steam does this for in-game purchases.

Re: Ask HN: Why aren't micropayments a thing?

#69
post #60

Because payments are a for-profit industry. If we had some kind of digital money that could be transferred without any fees (because, say, the infrastructure was operated by the government, under the assumption that a medium of exchange that doesn’t take a few percent off every transaction is a Public Good we should have) then it would be much easier to see if micropayments are actually a thing that anyone is willing…

Nano is a cryptocurrency that is completely feeless. It's the only feeless payment system I know of. (This is not an endorsement, though the handful of transactions I've done with it over the past couple years worked as advertised.)

How are miners incentivized to maintain the network?

Re: Ask HN: Why aren't micropayments a thing?

#70
As a consumer, I don't want to do this because I don't want to pull out my credit card to pay $0.01. I think they're hard to make work on a small scale. So an aggregate of people say putting $10 into a news pool, and each paying $.01 cent to read, and the news pool paying the providers, might make more sense. The micropayment could be like "credits", and may be refunded.
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