Why micropayments are (still) a terrible idea • Hacker News Board

Re: Why micropayments are (still) a terrible idea

#11

Post by anigbrowl » Thu, May 28, 2009, 8:28 PM UTC

asciilifeform wrote: post #7

The enormous psychological gap between "free" and "non-free" definitely exists, at least in my own mind. There is yet another issue, which I have never seen brought up. Unlike physical goods, with information you know practically nothing about what you're buying until you've non-refundably consumed it, almost by definition. The only possible exceptions are very large aggregates such as books. And most available infor…

Well, there are a few things where you pay first - books, as you say, but also movies, theater, fast food and so forth. Unsurprisingly, this involves high marketing and a tightly controlled supply chain to be profitable, or else a very qualified consumer (no way am I going to pay >$30 for the privilege of reading a paper in Nature or something that I might find interesting, but if I was a specialist in that field that would be different).

I don't worry about the free/non-free thing. I see lots of stuff on the web that I'd consider worth a nickel, a dime, a quarter or even a dollar. The issue for me is that I am not going to get my credit card out and go through the 2-3 minute process of submitting all my billing information for such a tiny amount. Affiliate and adwords-type stuff is faster and better from the consumer point of view, but of course that often results in content degradation: as pointed out on HN recently, why write expertly about an obscure topic when there's more money to be made writing crap about a popular topic.

Re: Why micropayments are (still) a terrible idea

#12

Post by stcredzero » Thu, May 28, 2009, 8:34 PM UTC

Kadin wrote: post #3

I don't really buy his argument. At first he says that most online purchases are too big to really be considered "micropayments." Well, duh -- there's no micropayment infrastructure, so no true micropayments. The business models that exist today are the ones that somehow get the customer to cough up a couple of bucks. Then the main thrust of his argument is that consumers won't accept micropayments because there's a…

What a micropayment system needs to succeed is to drop the transaction cost, so that very small payments are feasible, and then they need to be transparent to the user. The charges can't just happen silently and then end up on a bill at the end of the month.

You don't need to actually move money every time for that. Just have an easily accessible widget/meter. (OS X Widgets, but connected to a page in the browser would be perfect for that.)

You can also give the user tools, like a 'Max burn rate' setting that prevented you from spending money at a rate faster than you're comfortable doing. (This would appear as the site restricting access based on pay.)

The people to make this happen are actually Google and Mozilla with cooperation from Opera. If you make it a part of the web infrastructure like the little lock icon for SSL is a part of it, or like the (default) Google search field in the upper right corner, then it will work, so long as it's voluntary. (Tipping) Make it an open protocol, and provide the centralized back-end processing for free, and the webapp hosting companies will throw it in, and everyone will have it.

Re: Why micropayments are (still) a terrible idea

#13

Post by stcredzero » Thu, May 28, 2009, 8:39 PM UTC

anigbrowl wrote: post #11

asciilifeform wrote: post #7

The enormous psychological gap between "free" and "non-free" definitely exists, at least in my own mind. There is yet another issue, which I have never seen brought up. Unlike physical goods, with information you know practically nothing about what you're buying until you've non-refundably consumed it, almost by definition. The only possible exceptions are very large aggregates such as books. And most available infor…

Well, there are a few things where you pay first - books, as you say, but also movies, theater, fast food and so forth. Unsurprisingly, this involves high marketing and a tightly controlled supply chain to be profitable, or else a very qualified consumer (no way am I going to pay >$30 for the privilege of reading a paper in Nature or something that I might find interesting, but if I was a specialist in that field tha…

What if Google hosted something like TipJoy, and the scheme was built as a very specifically formatted REST call with open source server-side software that authenticated and forwarded the transaction. If Mozilla built this into Firefox, then it would quickly become a part of what the users perceives as the Web Infrastructure, just like the (default) Google search box on the upper right hand corner, or the SSL lock icon.

Re: Why micropayments are (still) a terrible idea

#14

Post by enomar » Thu, May 28, 2009, 8:47 PM UTC

teej wrote: post #8

blhack wrote: post #6

Earlier quoted context omitted.

I imagine that you wouldn't actually have to process the transaction until somebody owes a largish ammount of money (relatively). Something around $10-20. What would work even better (this is how allofmp3.com used to work) would be to buy a bunch of credits...$10-$20 worth of them, then as you make "micropayments", it draws from this supply. Google's ad program also works this way. You pay in $50 or so, then each cli…

Doesn't Apple do this? If you make a purchase, you won't get a receipt until a few days later. It will aggregate all your "store" purchases across iTunes desktop, iTunes on devices, and the App Store on a weekly basis.

Amazon does. I use their mp3 store on Android. They appear to only charge my credit card at the end of the day so that songs can be grouped.

Re: Why micropayments are (still) a terrible idea

#15

Post by dan_the_welder » Thu, May 28, 2009, 8:55 PM UTC

blhack wrote: post #6

dan_the_welder wrote: post #2

Transaction costs are a killer. It hurts on cups of coffee which I sell a lot of. Merchant services are bastards.

I imagine that you wouldn't actually have to process the transaction until somebody owes a largish ammount of money (relatively). Something around $10-20. What would work even better (this is how allofmp3.com used to work) would be to buy a bunch of credits...$10-$20 worth of them, then as you make "micropayments", it draws from this supply. Google's ad program also works this way. You pay in $50 or so, then each cli…

True, I am currently researching giftcards for that reason.

Merchant services are still bastards.

Rich, rich bastards.

Re: Why micropayments are (still) a terrible idea

#16

Post by chollida1 » Thu, May 28, 2009, 9:05 PM UTC

dan_the_welder wrote: post #2

Transaction costs are a killer. It hurts on cups of coffee which I sell a lot of. Merchant services are bastards.

StarBucks, and I assume other retailers, have figured this out and offer refillable cards.

The idea is that you put say $25 on the card and that is a one time VISA charge. Then each time you use the card there is no additional merchant charge to them.

At the price of say $3 drink this can save them 7 of the 8 flat fee credit card processing charges, the variable charges for using the credit card are of course still there.

Re: Why micropayments are (still) a terrible idea

#17

Post by ryanwaggoner » Thu, May 28, 2009, 9:52 PM UTC

dan_the_welder wrote: post #2

Transaction costs are a killer. It hurts on cups of coffee which I sell a lot of. Merchant services are bastards.

I've always wondered about this...I live in SF, where a huge number of the little coffee shops are cash only or have a $10 minimum or whatever. As a result, I don't go there, I go to Starbucks instead. I get that the transaction costs of $.25 + 3% is brutal on a $1.50 cup of coffee, but wouldn't it be better to just raise the price of the cheaper items in the store by $.25, or even just $.15? The COG on a cup of coffee is what, like ten cents? So your gross profits are good, you just need more volume. Are consumers really so price sensitive that they'd go elsewhere over a fifteen cent increase? I wouldn't...I value convenience and a good cup of coffee over fifteen cents.

Re: Why micropayments are (still) a terrible idea

#18

Post by skinnymuch » Thu, May 28, 2009, 9:59 PM UTC

frossie wrote: post #4

Kadin wrote: post #3

I don't really buy his argument. At first he says that most online purchases are too big to really be considered "micropayments." Well, duh -- there's no micropayment infrastructure, so no true micropayments. The business models that exist today are the ones that somehow get the customer to cough up a couple of bucks. Then the main thrust of his argument is that consumers won't accept micropayments because there's a…

At first he says that most online purchases are too big to really be considered "micropayments." Well, duh -- there's no micropayment infrastructure, so no true micropayments. Exactly. There is no data in his argument - you can argue that people wouldn't want to pay a little versus nothing but how can you know? There is no real opportunity to test this on the Internet. In real life, there are people who make a living…

Definitely shouldn't be easy. Whichever company goes big time with micropayments in the next decade is sure to become a multi-billion dollar company (I'm positive Paypal is worth that much).

Re: Why micropayments are (still) a terrible idea

#19

Post by skinnymuch » Thu, May 28, 2009, 10:02 PM UTC

blhack wrote: post #6

dan_the_welder wrote: post #2

Transaction costs are a killer. It hurts on cups of coffee which I sell a lot of. Merchant services are bastards.

I imagine that you wouldn't actually have to process the transaction until somebody owes a largish ammount of money (relatively). Something around $10-20. What would work even better (this is how allofmp3.com used to work) would be to buy a bunch of credits...$10-$20 worth of them, then as you make "micropayments", it draws from this supply. Google's ad program also works this way. You pay in $50 or so, then each cli…

I really don't think the buying credits would work better. It would work, but not better. The whole point of micropayments is spending a tiny bit of money. How is buying $10+ in credits beforehand a micropayment? Defeats the purpose.

Re: Why micropayments are (still) a terrible idea

#20

Post by skinnymuch » Thu, May 28, 2009, 10:03 PM UTC

chollida1 wrote: post #16

dan_the_welder wrote: post #2

Transaction costs are a killer. It hurts on cups of coffee which I sell a lot of. Merchant services are bastards.

StarBucks, and I assume other retailers, have figured this out and offer refillable cards. The idea is that you put say $25 on the card and that is a one time VISA charge. Then each time you use the card there is no additional merchant charge to them. At the price of say $3 drink this can save them 7 of the 8 flat fee credit card processing charges, the variable charges for using the credit card are of course still t…

I go to Starbucks regularly and rarely see anyone using the Starbucks card. Though I see it being advertised near the cash register everywhere.