The quantity one situation for via the internet sellers and web-site owners accepting and processing micro payments is the rather high charges charged by payment processors and credit card businesses, which can generally eat into a important portion of the payment revenue stream.
Just before we examine the a variety of choices and solutions in dealing with this pervasive situation, we will need to very first define what constitutes a micro payment.
A micro payment is a payment for an item or service that is of low worth. For example, website payments for ring tones, pay-per-views, downloads, e-books, and subscriptions in the $1 - $three range would be deemed as micro payments. A 25 cent payment for a download or a 5 cent payment for a SMS are very superior examples of lesser worth micro payments.
There are two basic procedures that an on the web seller may employ to accept a micro payment. The initially strategy is to use a credit card, but the merchant charges would be fairly high to accept a significant number of payments for $1 and $two micro payments, and this is not generally a price efficient alternative.
Some on the net business enterprise owners whose web-sites sell micro payment valued really good and services will ask buyers for their credit card particulars, and will course of action fees and invoices to their customers' cards when account balances reach specified payment threshold amounts.
A different variation of this technique is to charge the customer's credit card a minimum charge quantity of (say $10), and a credit in this amount is then posted to the user's account, which depletes as nominal value goods and services are bought from the vendor.
The situation with this technique is that customers do not like supplying their credit card details to strangers, and they do not like the thought of creating a down payment obtain commitment for goods or services which the customer could possibly ultimately choose not to acquire.
The other alternative is to method payment for each and every micro transaction as it happens utilizing an web based payment method, and there are a few viable selections with several businesses competing in this space, some of which are considerably alot more expense efficient than other individuals, as I shall explain.
Let's look at the following example:
Consider a micro payment in the quantity of $two USD sent internationally (from a single country to yet another) working with a company account.
I've compared the fees that each of the following on the web payment processors would charge to handle this payment, and present the outcomes below, from highest to lowest cost:
ZayPay.com $.99 flat fee = $.99 (49% commission)
Moneybookers.com 1.9% +$.40 = $.44 (22% commission)
PayPal.com Typical two.9% + $.30 = $.36 (18% commission)
AlertPay.com two.five% +$.25 = $.30 (15% commission)
PayPal.com Micropay 6% + $.05 = $.17 (8.5% commission)
Payments.Amazon.com five% + $.05 = $.15 (7.five% commission)
CashSender.com 1.five% no minimum = $.03 (1.five% commission)
The highest charges would be incurred if applying the services of Netherlands-based ZayPay and UK-based Moneybookers. PayPal's standard payment service would result in an 18% payment commission, and even their lite service for mirco payments outcomes in an 8.five% commission. By far the lowest price micro payment processor is Canadian based CashSender, as their 1.5% commission does not have a fixed fee component. Therefore, CashSender's fee is even a fraction of the price of the next lowest deliver on the list.
Many online sellers and web page owners accept micro payment as the life-blood of their business operations. This signifies, quite a few such payments are processed over the course of each and every month, all through the year.
For this reason, to see the true bottom line impact of the fee differences presented above, we need to element the data up to a one year analysis.
Let us assume that a typical internet seller desires to process 1,000 of these $2 payments each month, which translates into 12,000 such payments every year (representing $24,000 in annual micro payment revenues).
We then require to adjust our data to reflect the annual fees employing each and every of the respective on line payment services, and the data is presented as follows, once more listed from highest price to lowest cost:
ZayPay.com ($.99 flat fee) X 12,000 payments = $11,880
Moneybookers.com (1.9% +$.40) X 12,000 payments = $ 5,256
PayPal.com Typical (two.9% + $.30) X 12,000 payments = $ 4,296
AlertPay.com (two.5% +$.25) X 12,000 payments = $ 3,600
PayPal.com Micropay (6% + $.05) X12,000 payments = $ two,040
Payments.Amazon.com (5% + $.05) X 12,000 payments = $ 1,800
CashSender.com (1.five% no minimal) X 12,000 payments = $ 360
The most nicely known firm in the on the internet payment space is PayPal, which is owned by eBay. PayPal's standard on line payment service is basically $4,000 per year even more costly than the low cost leader.
PayPal's lite micropay service is $1,680 way more expensive than the low value leader, and even Amazon, which is the second location low expense leader is 4 occasions much more expensive than the low value leader.
In conclusion, on the web sellers and webpage owners need to have to pay incredibly close attention to which via the internet payment service they decide on to handle their micro payment transactions. Even a middle range micro payment processor will price a number of thousand dollars per year far more in fees than utilizing the low price leader.