Simple: friction cost. Going through a sign up and payments process is simply too much of an investment of time for the value equivalent to a 1c payment. It’s like asking: “why don’t people drive to stores to buy 1c single pack toothpicks instead of picking the food stuck in their teeth out with their fingernails, even though it’s unsanitary etc?”. The answer is friction cost: the time, effort and cost is simply not worth it for one toothpick, so people typically buy at on average $100 when they shop for groceries etc. Another example is quantity preference: why don’t gyms offer weight lifting charged at 10c per kilogram lifted or 1c per 10m run on a treadmill? Because most people prefer to consume in large and varied quantities and don’t want to have to restrict or plan consumption in such low quantities. Same goes for music streaming or video streaming services: most people would prefer to consume as much as they like with a fixed regular committed cost, though pay per movie / view do exist they are not considered micro payments and can be relatively expensive.
Ask HN: Why aren't micropayments a thing?
151–160 of 194 posts
Re: Ask HN: Why aren't micropayments a thing?
#152As sometime who has worked full time on this for over 5 years now, I have found a few aspects of your answer: The technical challenges of doing it with credit cards are overwhelming (in CC parlance, a "microtransaction" is anything under $10) due to fee structure. You can simplify this by using a different payment rail (in my case, Lightning over Bitcoin), but now you have a different problem: nobody has Bitcoin. You…
>You can simplify this by using a different payment rail (in my case, Lightning over Bitcoin), but now you have a different problem: nobody has Bitcoin.
The problem is that Lightning essentially is a subscription service. The user has to lock much more Bitcoin in a channel in order use Lightning for micro transactions, which defeats the purpose. The minimum fee to get a Bitcoin transaction confirmed in a reasonable amount of time is often over $20 USD at this point. That's a very large deposit for a $20 fee to be worth the effort.
They could deposit a smaller amount of Bitcoin in a custodial wallet, but at that point you might as well use a credit card or Paypal. It defeats the underlying appeal of Bitcoin, which is controlling your own money.
More people would have, and more importantly use, Bitcoin if it was allowed to scale on-chain. Why that hasn't happened yet is a different rabbit hole.
Re: Ask HN: Why aren't micropayments a thing?
#153As sometime who has worked full time on this for over 5 years now, I have found a few aspects of your answer: The technical challenges of doing it with credit cards are overwhelming (in CC parlance, a "microtransaction" is anything under $10) due to fee structure. You can simplify this by using a different payment rail (in my case, Lightning over Bitcoin), but now you have a different problem: nobody has Bitcoin. You…
Lightning over Bitcoin? This can't be serious, can it? LN is vaporware from day one. It serves no purpose because it is essentially centralizing a decentralized service. And when it still cost $5-10 to send BTC to a LN node, you are no better off than credit card fees. Hilariously BTC had this problem solved from day one, then Blockstream hijacked the GitHub repo, kicked out all the original devs and artificially lim…
My take is that Lightning was a stalling tactic so that the original community would give up and fragment into other cryptos, destroying the growing network effect. It seems to have worked.
Re: Ask HN: Why aren't micropayments a thing?
#154Earlier quoted context omitted.
I get this, but also there's a class of things where we know we're constantly being charged by use, and we don't constantly think about it. Gas, electricity, water are all cases where my use is metered, I _could_ try to micromanage it on a daily basis, but so long as my bills don't vary wildly from month to month, I don't pay especially close attention. To the degree that I self-regulate my use, it's more about the e…
The difference is that (1) metering is mostly done for limited resources and (2) you don't really have a choice but to not mind for any of the services mentioned. If someone came about and offered a flat-fee electricity connection, the majority would switch in an instant even if their bills remained about the same.
Many utilities in the US have this. The utilities charge a fixed monthly fee based on estimated usage. Each year the amount is adjusted based on the previous year. It's not that popular overall but serves lower income households well.
Re: Ask HN: Why aren't micropayments a thing?
#155I had an idea for micropayments once upon a time that worked with existing industry: buy your own ads.
As in, you sign up for my service, ACME Micropayments, and give me whatever you want as a monthly subscription. Based on that and your web activity, ACME Micropayments determines a per ad amount and starts bidding on advertisement space (but only to show to you). In the sense of GDPR this is one of the few things that might make sense to opt into tracking for.
Anyways, if you win the ad space you don't see an ad and if you don't win the ad space the site you are visiting still gets paid. If you pay enough monthly to outbid everyone, you are paying for an ad free experience. If you low ball it you still see a bunch of ads (until the end of your year/subscription period where with a surplus of money the bidding can go up).
Re: Ask HN: Why aren't micropayments a thing?
#156Human psychology
Re: Ask HN: Why aren't micropayments a thing?
#157As sometime who has worked full time on this for over 5 years now, I have found a few aspects of your answer: The technical challenges of doing it with credit cards are overwhelming (in CC parlance, a "microtransaction" is anything under $10) due to fee structure. You can simplify this by using a different payment rail (in my case, Lightning over Bitcoin), but now you have a different problem: nobody has Bitcoin. You…
Micro-transactions require micro-products, and those are a hard sell.
Compare a tangible market situation: remember the old Bazooka gum that used to say "3 cents" on each piece? Few customers are going to walk into a store and buy a single piece, no matter how cheap and frictionless payment is. At that level, the burden of thinking "I have to actually go and buy it" exceeds both the financial cost and likely the perceived upside of a single bite of gum. You can successfully sell a handful alongside another transaction, or a bag of them for a dollar, though, because you've raised the stakes of the total transaction high enough that it's worth thinking it through.
Maybe the classic micropayment story-- the individual news article/video view/song play-- is a single piece of Bazooka. Since it's likely to be ephemeral and competing with a nearly-as-good free alternative (the same content on an ad-based site), you don't have much room to make the case that it's worth going through a purchase process.
Re: Ask HN: Why aren't micropayments a thing?
#158Micropayments are technologically simple.
Being a payment processor in the ways that are safe and efficient and irreversible, at least in the US, requires a money transmission license in each state that costs on the order of $1M per state to obtain.
I really really wanted to start a micropayment processor, but it's basically illegal to do it the way I wanted to.
Re: Ask HN: Why aren't micropayments a thing?
#159People are mentioning technical & payment processing hurdles, but those are all easy to figure out. Look at the gaming industry, mobile app stores, iTunes, online gambling, toll booths, tipping on various online platforms. Micropayments are most definitely already a thing, and have been for a while. A better version of your question is – why do newspapers charge for a monthly subscription instead of a per-article fee…
In Germany there are sites like "Stifung Warentest" (a mostly neutral product testing organization) that charge one-time fees of 5-10 € for accessing test reports for specific product categories, e.g. mattresses. I bought some of these in the past, they also offer regular subscriptions but since most people are only intermittently interested in specific product tests I don't think they sell a lot of those. So it can work I'd say, just maybe not with your average run-of-the-mill 5-minute read news article.
Re: Ask HN: Why aren't micropayments a thing?
#160They are a thing in gaming. There are companies that will handle the micropayments for you as an indie or small developer. The overhead costs are high so the $0.01 will become $0.007 or sth. Importantly, those companies act as merchant of record which makes accounting much simpler for the developer.
I m not sure why this model is not being adopted by blogs , i guess it's because those companies don't want to go into the content moderation minefield. It's all fun when coins are paid for virtual sheep, but if people start being activists with the micropayments vendor it's a really bad
I don't think Ads are a bad model for content monetizing, they have been the dominant way to monetize newspapers since forever. HN's constant preaching against advertising is illogical, and discourages people (willfully?) from creating more ethical , better forms of advertising.