Ask HN: Best Micro Payment provider?

https://news.ycombinator.com/item?id=432284

by dell9000 • 18 years ago

40 26 18 years ago

news.ycombinator.com

HN crew -

What is your advice for the best provider to accept micropayments? Ideally the economics work for products that are $0.99 - but anywhere from $0.99 - $9.99 would be ideal.

Obviously the transaction charge is what makes the small prices so difficult... any suggestions would be greatly appreciated!

somagrand2• 18 years ago

This is a great question. I assume PayPal is not the answer in this space even though Apple uses them on the iTunes store.

apollo2• 18 years ago

I didn't know that iTunes uses PayPal for credit card charges. Do you have a source on this?

somagrand2• 18 years ago

Take a look at your payment options in your user account preferences. You'll see a paypal option.

I assumed they only offer PayPal in hopes of bringing PayPal's customers even at the sake of margin.

ewoodh2o• 18 years ago

Apple also aggregates payments. I use my PayPal account (somehow that lets me avoid sales tax...who knows why...) for iTunes. Typically they'll bill me immediately for the first song (presumably to make sure my PayPal account still works), then they seem to aggregate anywhere from 1 day to 1 week worth of purchases up to about $30 before billing again.

They did this aggregation when I just had my plain old credit card number linked as well, although I don't think they ran the first charge immediately (probably just reserved funds).

jsdalton• 18 years ago

I think the problem is there is no great answer to your question. Here are a few possibilities though:

TipJoy (http://tipjoy.com/) is making a play as a micropayment platform I believe. I think they're a YC company as well.

Amazon Flexible Payment Service (http://aws.amazon.com/fps/) is also one to scope out.

dell9000• 18 years ago

Thanks much -

Has anyone used Amazon FPS vs. PayPal vs. Regular processor?

ivankirigin• 18 years ago

Shoot me an email if you have any questions about Tipjoy. We're working on something closer to what FPS provides: ivan@tipjoy.com

malbiniak• 17 years ago

pretty basic amazonfps question - do customers have to have an amazon account to complete their transaction?

noodle• 18 years ago

well, depends on what you want to do. you could aggregate like tipjoy does, if that fits your model.

there's also http://aws.amazon.com/fps/

there's also one other good one out there, but i can't recall the name since i don't use it. will edit/reply later if i can remember or find it.

cvinson• 18 years ago

I have done a thorough analysis of this; I have a band website builder app that has a MP3 store.

You should look primarily at the fees. Paypal's standard account has is around $0.30 per transaction + 3%. If you Google "PayPal Micropayment" they have an account that is not advertised publicly with lower fees for small transactions. The downside is you have to make a new account to use it, including a different bank account. I spoke to our PayPal account manager, and he said there is no internal plans to change this or promote the micropayments plan.

pageman2• 18 years ago

btw, you have a URL for that band website builder that has an MP3 store? :)

midnightmonster• 18 years ago

PayPal offers a micropayments fee model with $0.05 transaction fee + 5%. It beats their standard model on transaction amounts up through $11.90.

yelatia• 18 years ago

check www.alertpay.com

pageman2• 18 years ago

if you want to go to Asia and willing through an HK LTD. we can help you in asiapay.com (full disclosure: I'm a director) :)

hotshothenry• 18 years ago

i wrote an article about this same subject, http://newsolareclipse.com/2008/12/micropayment-systems-the-...

tstegart• 18 years ago

Both Paypal and Amazon do micropayments with fees of $0.05 + 5%. So basically, your fees for a $0.99 cent MP3 is around 10 cents. It definitely makes micropayments feasible.

patio11• 18 years ago

I think you're better off NOT taking micropayments, primarily because the cost of authorizing the transaction dominates the actual value of the transaction.

What do I mean? Well, suppose you had asked me to pay a nickel to read this comment thread. I value my own time at about a hundred dollars an hour. I've already spent more than a nickel of time reading this thread, so clearly I should have been willing to pay a nickel to read it. But the mental decision point on whether to cross the penny gap or not, plus the amount of friction it would take for me to authorize this transaction (fish out credit card, type in digits, sign in, click "Are you sure you want to pay $.05 to this merchant?", yadda yadda), is worth far more than a nickel of frustration to me. That increases the cost of the content to me but it is revenue that you don't capture.

Rather than selling things for micropayments, do what essentially everybody does in this space: sell a microcurrency in macro-units ($10, $20, etc), and then make authorizations to spend the microcurrency as friction free as possible. For getting over that penny gap on the first transaction, you probably want to give people a significant incentive to buy their first hit of microcurrency -- 100 dragon eggs for $5 instead of $10 like usual, whatever.

Clarifying edit: for non-Americans reading this comment, it might be useful to know that a nickel is .05 USD and a penny is .01 USD. They're the common names for two of our low-value coins.

notaddicted• 18 years ago

That is a good idea. Billing monthly maybe possible too, depending on the product/service.

HeyLaughingBoy• 18 years ago

This is one of the reasons I like PayPal and use it in preference to credit cards for online purchases. It has very low friction. To buy something online I normally need to get up, find my card (back when I used CC frequently, I had the numbers memorized, but no more), type in digits, go through the whole procedure.

Whereas, with PP, the site just takes me to PayPal's site where cookies know who I am, so I just enter my password, press OK, and I'm done.

It's gotten to the point where I often check if a vendor takes PayPal as soon as I even think of ordering.

RiderOfGiraffes• 17 years ago

TipJoy solves that problem. Just click the button and the "money" is transferred. You don't even need to register until they decide that you probably have "paid" enough to make it worthwhile.

I am not associated with them, but I love the idea, think it's a great modeel, and am about to become a customer.

seiji• 18 years ago

A micropayment is less than $0.01 USD. Otherwise, it's just a "payment."

anthony_barker• 18 years ago

We did the analysis about 2 years ago for a charity and went with paypal - I believe the reduced fees for smaller payments only applies if you open your account in the United States.

skootch• 17 years ago

have a look at www.onetouchpurchasing.com

Ask HN: Best Micro Payment provider?

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