Micropayment

The term micro-payment, low-value payment and micro- payment refers to a payment method less sums incurred primarily for the purchase of " paid content ", ie digital goods such as music pieces and newspaper articles, but for example if you buy a bun. According to the prevailing opinion fall under micropayment amounts from 0.01 to 5.00 euros. Any additional sums are accordingly called Macropayments. This limit is, however, not used consistently in practice and theory. The lower micropayment area is often referred to as micro amount Milli Payment, Payment Nano or Picopayment. This area includes, for example, the fixed charges in Germany that are billed in one-cent fractions.

The importance micropayment enabled payment systems arose in the course of increasing e- commerce sales start of the 21st century. With the trade of digital goods originated entirely new business. Now that digital goods could be distributed with very low cost through the Internet, the low-price segment was being approached (news, real-time stock quotes, music downloads, online games, and others).

Problem

For low-value goods, the cost of payment a central problem: Conventional methods, such as credit card payment or direct debit are not suitable, since the cost of payment processing often exceed the value of goods. The alternative strategy of many providers to fund a largely free quote by advertising is often not effective. First, the increasing willingness to pay is digital goods and services are not siphoned off for (low ) by doing this, and secondly, are the largely fixed revenue through advertising may be difficult to calculate expenditure by the traffic that cause the demand side, opposite. Overall, there appears to be a gap payment system: required procedures by which low -priced goods can be economically settled.

The chances of success of micropayment systems are, however - critically discussed - especially in the Anglo- Saxon countries. Opponents often the construct of mental transaction costs: to (Lit. Szabo, 1996): the customer is above a certain price limit already to consider whether a good is worth the asking price for this to " expensive " ( opportunity costs). The " mental cost " resulting from the fair, among other things, is required in each case for evaluating the properties of the goods and for decision making. Now has a lot of low -priced goods are weighed in each case, it may be that the mental costs already exceed the prices of the goods of this. To reduce the mental transaction costs, please refer to known measures such as product bundling, ie the combination of several products into a package. Thus, the micropayment range is left often.

History

Micropayments in themselves are not necessarily a modern phenomenon: with text screen as it was in Germany in the 80's already possible for a pay- per-view or pay-per- click model amounts from 0.01 to 9.99 DM per page or up to DM 1.30 per minute to settle. Nevertheless, the topic has been intensively addressed until the mid- 1990s by start -up companies as DigiCash or First Virtual, the zoom ventured with extensive field tests as pioneers in the establishment of new, unconventional payment systems. The high expectations and the initial euphoria, however, had quickly give way to disillusionment as failed subsequent piloting of banks quickly to a lack of demand from customers and dealers. This was due less to a lack of demand, rather than product-specific shortcomings. The list of system operator, who came up today and went is long and you can say that - even if gradually here and there show promising trends - has yet fully implemented no system.

Systematization

Many of the currently courting participants to payment systems with the ability to advertise billing of small amounts. Essentially, these systems can be distinguished into three types: Prepaid systems, Billing-/Inkasso-Systeme and mobile -based systems.

Prepaid systems

When using pre-paid ("Pre- Paid" ) systems of the monetary load time is actually buying preceded in time. The credit is therefore virtually guaranteed, and may be waived at time of purchase of costly liquidity controls and account queries. The pre-paid systems include electronic money, Bonuspunkte-/Rabattsysteme and virtual accounts.

EGeld

Under eGeld such systems are grouped under the definition of published in the 1998 report of the European Central Bank ( ref: European Central Bank, p.7) and the E -Money Directive ( 2009/110/EC ) ( ref: European fall Union, Article 1, No 3 b. ) ). This is in eGeld to products that except on the issuer which can be used widely for payments to companies. ( The latter means that about one- purpose cards - are excluded from this definition - as the phone card, in which the systembetreibende institution is also the money receiver; should instead a cash equivalent, wide payment option be given ).

There are systems based on software, where customer and vendor side if necessary a wallet software must be installed, which provides the functions of an electronic purse as credit storing and netting.

Furthermore, among eGeld hardware-based solutions in the form of smart cards. Here, the functions of the electronic purse of a microchip will be provided.

A special variant of the eGeldes are distributed, based on peer -to-peer schemes, the benefits of cash, especially where the wide- anonymity, and remittances combined. A now well-known variant is Bitcoin, which - based on sophisticated encryption methods - fully function without central control and with voluntary fees of around 0.0005 Bitcoins (about 0.3 U.S. cents, as of Jan 2012) manages per transaction.

Bonuspunkte-/Rabattsysteme

For bonus points and discount schemes are money-substitutes, in which pre- pay the dealer. These bonus points are purchased for their monetary value in advance to the system operator, which can then be subsequently passed on to customers. The latter can use the collected points to purchase products from our range of connected to the system company - be it points financing on favorable terms or complete.

Virtual accounts

Under virtual accounts a number of heterogeneous systems is summarized. It is characteristic that it is not to eGeld in the above sense and that there is a certain amount of credit that can be used up gradually. These include, for a so-called scratch cards in which a card- identifying code to be scratched, its indication at a respective credit can then be consumed. The Funds are not stored on the card itself, but to a shadow account at the system operator.

Furthermore, this includes online account -based methods in which credits first needs to be created or charged. Then, for example, can by e -mail value units between people or customers and dealers are transferred.

Billing-/Inkasso-Systeme

Billing-/Inkasso-Systeme reduce the cost per transaction by the fact that ( " Billing "), which then subsequently periodically added in a second step, first a series of individual payments will be settled by conventional payment methods cumulated. As collection agencies come alongside banks also often telecommunications providers. The billing can also telephone or carried out directly via the mobile phone bill. Even billing platforms is sent to the digital content, which can then be accessed free of charge by the user.

Mobile -Based Systems

Mobile -based micropayment systems (see cell phone payment ) form a cross-section function: with mobile devices enable location-independent, they pay by the system types listed above. In addition to the ubiquitous possibility of payment Furthermore, the high penetration rate of mobile phones, the devices associated with the identification of the customer and the favorable conditions of the mobile networks in terms of transmission reliability advantage.

Requirements for micropayment systems

The following requirements are placed on the variety of payment systems.

Micropayment as an online entertainment business model

In recent years, it has developed a system (especially in the music and in the industry of computer and video games), which enables the customer to purchase of individual elements for products purchased under the subject headings Micropayment or Micro Transactions within the entertainment industry. Micro-payments are applied for, with songs to equip (eg via iTunes or Amazon) or special items, levels, episodes and advantages to buy MP3 players in games that other players can not get in a normal manner. The physical production cost is often unequally relative to the potential gain as a virtual object (even an MP3 file ) must eventually be made ​​only once, but assuming an infinite number of copies can be made. Depending on the popularity of the platform paragraph can bring huge returns. The basic principle is to be understood according to the view that many micro-payments can be lucrative together well when only a single production effort is.

Micropayment is found exemplified in the business models of virtual worlds such as Second Life, in PC gaming distribution platforms like Steam, Virtual Console for Nintendo Wii or Games for Windows and Itemshop of MMORPGs like World of Warcraft or Runes of Magic.

In terms of free-to -play models (also: Free2Play ) ensures the micropayment only for the actual payment of the service. In a free-to -play model is a marketing concept that especially for online games will use. The game can this always be obtained and played for free on the Internet, but for a liquid progresses, the player must acquire smaller benefits packages, or a special game currency in order to catch up with the leading ( and also paid ) players can. Paid extra content will therefore often mandatory for their own performance. Depending on invested play time and depending on the enthusiasm of the small amounts can condense in sum to quite large amounts. As a contrast, using mainly renowned game makers a subscription model, which - similar to a flat rate - represents a higher, fixed amount. But then also all game content available to all.

The payment methods are simple and usually work on a prepaid system, by credit card or direct debit. The consumer buys at retail, or online a points card that he can use for the purchase within a distribution platform. Nintendo uses for its own offering, for example, so-called " Wii Points". An Wii Points corresponds to - depending on the provider - an amount of approximately EUR 0.01.