Abstract
Mercator Advisory Group is pleased to announce that its review of its latest
report, Solving the Micropayment Problem, Online and at the Point of Sale.
The report reviews both the history and challenges of electronic
micropayments and examines how the existing rails have evolved to address
under $5 electronic payments at both the point of sale and for online
transactions.
In particular, the report examines the evolution of multiple micropayment
models and how they have shifted the economics of micropayments, especially
online. The ad-supported revenue model, powered by Google AdWords and other
sponsored advertising sources, has significantly altered the need for a
ubiquitous online "coin purse" for digital products below $0.75 in value. At
the point of sale, micropayments have been successfully addressed by lower
interchange rates for selected merchant categories and, in some markets, by
contactless payments.
The Solving the Micropayment Problem report includes a review of market
participants including PayPal, BSG Solutions Group, ClickandBuy, PaymentOne,
and Peppercoin/Chockstone.
Highlights of the report include:
- Online micropayments has been an unkind market segment for payment
processors aggregating multiple small transactions as a pureplay processing
service.
- The early Internet dream of nearly frictionless purchases of sub $0.75
content has been made irrelevant by free content and the ad-supported revenue
growth that powers the best free content sites as well as the growth of search
giant Google.
- Online, it is per transaction charges, not interchange, that eats up
excessive margin for sub $1.50 digital content.
- Given lower interchange rates for low-risk, high volume merchant
categories such as QSRs, transit, parking and others where micropayments are
common, barriers have dropped for the electronification of under $5 payments.
- The markets for micropayments at the POS overlap with those for
contactless payments.
"Under $5 micropayments online have been a persistent source of pain for
content creators and distributors," comments George Peabody,
Director of Mercator Advisory Group' s Emerging Technologies Advisory Service.
"Evolution of payment models such as ad-supported content creation and
distribution have largely erased that pain. Coupled with subscriptions and
payment aggregation, the online picture is clearer but still requires better
solutions. Ironically, electronic micropayments work better at the POS than
they do online."
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