This article focuses on micropayments for consumers for something like movies or news subscriptions. But what about micropayments for something like micro work. Platforms like Amazon Mechanical Turk, Fiver, etc all build their own minimum wallet systems (must have $5 or more to cash out). I feel like the ability to pay small amounts to do work in parallel would be huge but remains fractured and clunky until this micropayments future matures
Yeah it's not addressing the use cases for micro payments. Streaming music and video could similarly pay out micro payments to creators who could cash out when it's profitable to do so, bearing in mind tx fees.
Avoiding the situation of requiring many payment decisions is still there.
Streaming music consists of a single transaction that some platform logic would then divide behind the scenes. The consumer isnt forced to make multiple payment decisions. If and when they are, it probably won't work. Even having to pick and choose what portion of some pool of funds one wants to give to which creator creates cognitive friction that I don't think we've seen solved yet.
> Even having to pick and choose what portion of some pool of funds one wants to give to which creator creates cognitive friction that I don't think we've seen solved yet.
Humble Bundle would probably have good stats on that: how many people bother to alter the default proportions of the devs/charity/HumbleBundle split?
I'm not sold on the argument that US credit card swipe fees are a true floor, given that transaction fees fluctuate from country to country somewhat significantly, though I do agree there's likely a "single transaction floor."
That said, I'm not in agreement overall. I think there are likely many things that can be billed in "sub-minimum-transaction-increments," it's just that they only become worth charging when they exceed the floor. So I guess in my head most of it is tracking "microdebt," and only sometimes is combining enough of the outstanding "debt" enough for it to be worth a payment.
It's basically a permutation seen in every game with (much hated) in-game currency. Maybe there's dirt cheap things to buy, but you still have to exchange to IGC at a $1:n floor.
For an actual example of a single transaction floor in a functioning financial system, the pricing of Euro TIPS transfer system (https://www.ecb.europa.eu/paym/target/tips/html/index.en.htm...) may be relevant, where the bulk cost for transferring money between different banks in different countries is much less than a cent per transaction, €0.002.
There's some overhead at the sending/receiving institution as well, but it has a similar order of magnitude (0.0005-0.005€/txn mostly depending on your scale because of the fixed costs); the total cost for a proper interbank transfer is less than a cent if you do things right. The price is mostly determined by other factors, not the cost - it can be (and often is) zero for competitiveness purposes, recouping the costs from other services, or it can be something like the same 30 cents as the original article lists if someone is willing to pay that.
Micropayments don't need to come with them either. Contactless payment don't have chargeback already and are considered as cash (at least in some countries including mine).
Neither do debit card payments. Which almost everyone uses here in my part of the EU.
Also, the idea of doing a chargeback for something here, is totally alien to the people in my surrounding countries.
Chargebacks and distpute resolution and all that stuff is just something people in the us rely on, because using credit cards makes fraud easy. If I use my chip and pin card, then I can be sure that I did the payments. If I rely on a number printed on my card that I have to give someone, then fraud is just too easy.
I wish all online credit card transactions would use 3D Secure, but for some reason they don't.
The same for when people complain that european bank cards don't have any cashback or other "free" stuff associated with them. People don't realise, that they themselves are paying for that, no? I'm really glad the EU legislated caps on card transaction fees, because moving some bits around can only cost so much.
> Neither do debit card payments. Which almost everyone uses here in my part of the EU. Also, the idea of doing a chargeback for something here, is totally alien to the people in my surrounding countries.
Debit cards come with chargebacks. Chargebacks are a feature provided by the payment networks themselves, so it doesn't matter whether you're using a credit or debit card.
Bank transfers (at least in EU) do come with some reasonable consumer protections; it's not to the extent that a chargeback provides in disputes with the merchant (receiver-initiated transfers e.g. direct debit transfers do have similar or even more extensive protections) but it does come with some protections against fraud, e.g. if your credentials were stolen and misused to make payments that you did not authorize, then you would be able to recover your money, unlike cryptocurrencies.
Theoretical articles like this ("proving" that X won't work) are almost always doomed to be wrong, because you can't enumerate all possible ways that something COULD work, but won't.
A shorter way to say that is that something can fail thousands of times, but only has to succeed once. If the right technical, social and business factors come together, you get working micropayments.
We already have micro-payments, and it's called ads.
It is pretty transparent to the user, there is no per-transaction fixed cost (though the margin taken by Ad provider is pretty huge), and some people are living pretty nicely with it.
I agree with the various points this article makes, but it doesn't mean micro-payments are a no go. Just make it as seamless as ads!
The article mentions subscription, but doesn't mention the possibility of subscription-based micro-payments?
That's what scroll.com, and I believe there solution has none of the issues mentioned in this article, even though it would still make sense as a 402 Payment Required! Of course you can't generalize scroll.com everywhere, for many reasons. But I believe /that/ idea is a start of making micro-payments a thing.
Thanks for the scroll.com ref. Had that idea several years ago, but was too early. Glad someone running it. Will check out their fraud prevention, that stuff is pretty hard. When fraud drains campaign money, who cares, kinda, but when it's taking member money- can't have that.
Google had a short-lived experiment called Google Contributor, where you could pay a monthly subscription to hide AdSense ads. Each page view would subtract from your monthly balance and the leftovers would be refunded. I had mine set up to show cat photos instead.
This article assumes that things like transaction costs are fixed, and customer support is legally required.
If you removed those two assumptions, micropayments make sense.
Crypto currency actually can solve those problems elegantly. You can have low transaction costs. And, transactions can be anonymous and irreversible (depending on the currency).
Critics will rightly point out those promises are not always kept (ethereum gas prices, for example), but they are the goals. Lower transaction fees, I would assert, are not the goals of PayPal.
The problem is not technical. It's that there isn't mass adoption. If a well funded startup did a "Fresno Drop" they might be able to overcome that. That would be interesting and could be very effective.
Crypto currency does not have "low" transaction costs: it takes a lot of energy to commit a BTC transaction to the blockchain. Crypto can only ever be viable for non-trivial (large, or unusually valuable) transactions where trust cannot be provided by common mechanisms, such as a stable government or a private escrow agent. This clearly doesn't match the typical use case for micropayments.
Bitcoin (and other proof of work coins) are not suitable for the job. But there are cryptocurrencies out there that are almost purpose-built for it! Stellar, on which https://satoshipay.io/ is built, is one of those.
>it takes a lot of energy to commit a BTC transaction to the blockchain
This is a misunderstanding of how mining works. It takes virtually zero energy to create a block (ie. commit a transaction). However, it takes massive amounts of energy for your block to be considered valid. This is because each block also comes with a block subsidy (currently 6.25BTC), which many miners are competing for.
I don't think the OP is misunderstanding anything, but you seems to be: the proof of work occurs at the creation of the block (which doesn't really mean “commit a transaction” but instead “acknowledge a bunch of transactions requested by users”), the “validation” comes from other miners adding more blocks to yours (the “chain” thing).
As someone whose parents run a small business, I've found out that the average person doesn't realize how complicated it actually is for businesses to get payments from customers. All of the overhead in payment processing happens because meticulous records need to be kept for transaction to happen (Account Balances, Payer/Payee IDs, AML/KYC requirements). All of this needs to be logged and audited in case of invesitigation or a charge reversal.
With cash you don't have that problem - the transaction is physcial and immediate. But I doubt any micropayment system will get approval to transact money without anti-money laundering laws and transaction reversibility.
I've pointed out before that the enthusiasm for micropayments is from people who want to collect them, not those who want to pay them. Unlike credit cards, which, when introduced, were easy to sell to buyers but hard to sell to merchants, since the merchant pays fees.
Cryptocurrencies are not a magic bullet here. The technology for preventing double-spending is incredibly inefficient and slow. Transaction costs are high. Right now, a Bitcoin transaction costs at least US$5. It's been as high as $20.
Have you seen how much opening a lightning channel cost? And opening a second channel, if you cannot find a route to your merchant? How about refilling your channel? Or how to close it, if a malicious node wants to steal your funds?
That's right, it will all cost the same as a Bitcoin transaction.
And how about receiving a lightning payment? Well... The merchant need to have a balance so he can accept your payment(!) Yes, that's another Bitcoin transaction right there. Or if you're lucky you can find someone who'll give you liquidity (for a fee of course).
It's debatable if micropayments will ever take off, but lightning never will.
Every crytocurrency works well except for bitcoin, because its throughput was crippled to try to sell a centralized second layer owned by the company that weaseled their way into controlling the github and subreddit.
I don't think any of them make micro payments easy right now, but throughput is not a real problem until transaction volume goes WAY up.
Expanding throughput comes with severe tradeoffs: it increases the resource requirements for storing full blockchain history, and makes provision of mining services inherently more centralized in other ways as well. All things considered, a "second layer" with weaker trust guarantees may well be a preferable solution.
At the current scales, that is like saying a 128x128 jpg has big implications over a 64x64 jpg. Anyone who can watch a 240p youtube video can sync with bitcoin's limited blockchain. Not only that but most people don't need to and don't want to.
What is bitcoin's throughput? 2MB every -10 minutes-? That's less than 3KB/s. Let's not do this whole dance where the real numbers never come up in all the fear mongering.
PlayStation games need to download more than that to install. Many steam games push updates bigger than that.
A single 10TB hard drive would take over -92 YEARS- to fill up at that rate. And again, most people don't ever need to sync with the chain, they let servers do it for them.
And? For the third time, most people never even think about syncing with the chain. Do you understand how cryptocurrencies work? Have you ever used one? What is your point?
Since it is a micropayment, it is possible (or acceptable) to accept payment with zero confirmation (in less than 10 seconds), as pointed out by Satoshi in the "Bitcoin snack machine" post:
https://bitcointalk.org/index.php?topic=423.msg3819#msg3819
Yes, there is a risk of double-spending, but since this is a small amount, the cost of the attack may be higher than the benefit. The payment processor can also deploy more full nodes in different geographic locations to monitor and detect potential double-spending transactions in the transaction memory pool.
Since all you need is the software to generate your fake transaction with the right technical format, the cost of the attack can be zero.
And then a million fraudulent microtransactions will add up. Of course, that would never happen in practice, because the Blockchain cannot handle a million transactions in any reasonable time frame.
In case there are multiple conflicting transactions (for double-spending purpose), the network will only accept the first one and reject the rest. So the micropayment processor needs to wait for a few seconds when it receives the first transaction in the mempool. If no other conflicting transactions arrive, the first transaction will be acccepted. These few seconds give the first transaction big advantage over the double-spending ones, as it will most likely be included in the block.
If the attacker sends the legit transaction and double-spending one at the same time, it will be detected due to the few seconds wait by the payment processor.
there's no protocol-level guarantee of that, both transactions are perfectly valid, signed transactions and it's purely dependent on the good behavior of node operators to reject these
and in fact it is quite common to accept "double-spending" since that is really the only way to increase fees to push through a "stuck" transaction. Otherwise you have to wait an indeterminate (potentially forever) period of time until it exits the mempool of all network participants
If there are two valid, signed transactions that spend the same unspent input transaction (UTXO), only one of them will be included in the block. This is indeed guaranteed by the protocol [1].
Yes but it is in the best interest of the node operators to behave well in that way, so it's reasonably trustworthy even without protocol-level guarantees.
Huh, I might misunderstand it, but that property appears to be broken in account-based cryptocurrencies like Ethereum. Since there's no concept of unspent outputs, what could protect ETH etc users in a similar way? Wallet transaction index?
It is broken in Ethereum. In Ethereum, since consistency is enforced by transaction nonce rather than UTXOs, there is no way for a "watcher" to keep the payer honest by rebroadcasting a previously signed transaction output. Indeed, in Ethereum you can "cancel" a transaction in the mempool by signing a blank transaction with a higher fee and same nonce, which is by design.
There's a nonce on each account. If you see a transaction from the same account with the same nonce it's a double spend . Nonce can't be skipped either, so a double spend requires two transactions with the same nonce.
>but hard to sell to merchants, since the merchant pays fees.
There is a nice article which hopefully somebody can link that explains that visa was a success because merchants reduced their costs, too. They had to do informal credit accounting for all their clients who only paid for the purchased goods once a month. With visa, that accounting position, which could be a full-time employee, wasn't needed any more. Furthermore, they reduced their risk of clients defaulting on those micro loans.
Which means they’ll invest more to produce it, providing greater security to the network by making it more expensive to conduct a successful double spend attack. The users also want it to be secure. It’s a great alignment of incentives.
Cause fee replacing subsidy is the only way to ensure you can maintain the security without inflating the supply. Increasing the blocksize is not an opion. The solution is Lighting Network that allow cheap instant micropaymemts and leave large txs onchain where a tx is more expensive. LN is where most of the innovation is happening right now.
The actual cost of a Bitcoin transaction (when not socialized via inflation, or block rewards in the parlance) is ~the electricity cost of 700kWh, or $50, plus the cost of developing, building, and maintaining the miners. Each transaction also generates 87g of e-waste so that's gotta be non-trivial.
I'd suspect each BTC payment is actually $60-70. When block rewards end, someone's gonna have to pay that.
Ignoring the fact that's going to occur in 2140, what you've stated is simply not true, users decide what fees to pay, no one else determines the price.
I send zero fee tx's regularly. If you are in no rush the cost ranges from tiny to non-existent sending money across the planet.
It's never going to be used for micro transactions without a second layer but the whole premise of this comment is out of whack with the reality.
As I stated, right now, the direct transaction fees are low because the total fees are socialized. Miners make that back in block reward. Recently, people refused to pay more for transactions and BTC price remained constant-ish after the halving so hash power went down.
The actual cost of a transaction can be represented as the following equilibrium:
(E * pkWh) = F + (R * pBTC)
- E is the average amount of power required to process one transaction, a function of hash rate (~700kWh)
- pkWh is the average price paid by miners for power (~0.08 $/kWh)
- F is the average fee paid for a transaction directly (~5)
- R is the average block reward per transaction (6.25/3500)
- pBTC is the market price of a Bitcoin (~9500)
If (F + (R * pBTC)) is ever less than (E * pkWh) as happened after the halving, something's gotta give. Either the fee has to go up, the price of a Bitcoin has to go up, or the hash rate will drop. The halving demonstrated (3).
Make no mistake, though, the cost of a bitcoin payment is ~$50, you just have to distribute it over the parameters.
You didn't think miners were given you "almost free" transactions for their health or something did you? Your very-low transaction fee is the tip of a giant cost-burg.
As models go this is ok to highlight the cost/reward incentive to mine at all, but with the original whitepaper we all already knew that full network hash rate depended on cost of electricity, the block reward, the fees of transactions in the block, and the purchasing power of bitcoin. What's new, other than an incorrect focus on "per transaction" when the real cost is system-wide and depends on different/more parameters (sum of F, difficulty rather than hash rate, and transactions per block which individually contribute arbitrary amounts including 0s to the sum of F)? It just seems like another tiresome way to make the years-old remark of "wow look how much electricity the full system (a decentralized trustless ledger) consumes and how few transactions per second it supports!"
> It just seems like another tiresome way to make the years-old remark of "wow look how much electricity the full system (a decentralized trustless ledger) consumes and how few transactions per second it supports!"
The only way it doesn't waste inordinate amounts of power and support a reasonable number of transactions is if you pretend.
It is an inordinate amount of power relatively speaking and the transaction throughput is sad (though not sad enough to get people to use other versions that make different tradeoffs, apart from the obvious one of mainstream finance with Visa, Paypal, et al.) So what?
Waste? It's evidently not waste, because miners are compensated. Missed opportunities for that energy to have done work on something else, or at least done more efficiently so the surplus could do something else? Perhaps, but that can be said of anything. I'd instead criticize the far greater missed opportunities of not coating deserts with solar panels, not peppering the world with nuclear reactors, not having satellites beaming microwaves down, etc. etc. We'll never become a Type 1 civilization with attitudes suggesting we lower global energy consumption or try to allocate it only in approved ways.
> It is an inordinate amount of power relatively speaking and the transaction throughput is sad (though not sad enough to get people to use other versions that make different tradeoffs, apart from the obvious one of mainstream finance with Visa, Paypal, et al.) So what?
Well, I mean, if you're trying to launder money or manage a ransomware product, PayPal and Visa aren't great candidates.
> Waste? It's evidently not waste, because miners are compensated.
People are compensated for all sorts of wasteful garbage. I could pay some dude to dump gasoline directly into the rain gutters. Or move a mountain 6 feet to the left using only a shovel. That doesn't instantly turn it into a productive activity.
> Missed opportunities for that energy to have done work on something else, or at least done more efficiently so the surplus could do something else? Perhaps, but that can be said of anything.
There's no massive energy surplus. If we turned off the 55TWh/yr that's being burned on multiplayer Excel, it would stop a non-trivial percentage of our greenhouse gas emissions.
> I'd instead criticize the far greater missed opportunities of not coating deserts with solar panels, not peppering the world with nuclear reactors, not having satellites beaming microwaves down, etc. etc.
Sure, I'm down. Sounds great!
> We'll never become a Type 1 civilization with attitudes suggesting we lower global energy consumption or try to allocate it only in approved ways.
Not with that attitude :)
To me, it's like there's a giant smoldering tire fire in the town square, and everyone's walking around praising the tire fire for the nice warm glow it creates.
How did you arrive at these numbers? By comparing # of transactions in a block, to the block reward + fees paid for that block? Or by comparing the amount of energy consumed by the network in total and the number of transactions processed by the network?
> I've pointed out before that the enthusiasm for micropayments is from people who want to collect them, not those who want to pay them.
It might be just out of my ignorance for what the downsides are, but quite often I do wish I had a way to make micropayments, and I feel like lots of others do feel similarly.
lightning is really only cheap if you use a single centralized node as a payment provider, in which case you lose the benefits of decentralization. Otherwise you have to frequently open new channels as they become depleted of funds, which becomes quite expensive.
and if you just leave one big channel with lots of money in it, then you end up with this fun situation! Hope you don't have a power outage... ever.
You can replenish channels, even multiple all at once, either through someone just paying you, or an on-chain payment through a "loop". And trading some decentralization for "performance" when dealing with small frequent payments is still better than other choices.
Even if you use a centralized node, this kind of centralization in LN is not as bad as the typical "centralization problem" often referred to in cryptocurrency, because it doesn't mean counterparty risk. The worst thing that could happen is that you have to wait some time to get your money back.
I frequently come across paywall'd articles I'd like to read. I'm not willing to add more subscriptions to my life, but it would be great if I could pay 25¢ just for access to the one article. If the payment process was easy, I'd use it a lot!
last I checked LN channels must be pre-loaded with funds, which would seem to kill the incentive to use them for spontaneous one-off BTC transactions between otherwise unaffiliated parties, which would be most of the transactions taking place. Who wants to put up $100 just to transact $10?
Sounds like a good opportunity for a hub to connect micropayments merchants and consumers. Consumers can open a $10 channel, merchants open larger channels based on volume, and the hub provides rebalancing services for a tiny fee.
well sure, why not. this decentralization thing is mostly a fiction anyway, might as well re-centralize our superficially p2p money network back into a p2h2p model, since that actually works.
The handy thing about LN is that we can have that model without having to trust the hub in the middle. If there's a disagreement of the state of the funds in the channel it falls back to regular bitcoin transactions to resolve it.
If such a hub does this too much then they'll have trouble getting others to commit funds to a channel to them.
You don't need to have a direct LN connection with the content creator, just a path through intermediate nodes.
More likely users won't have to deal with all that because there will be micropayment wallet providers that can aggregate the transaction costs of buying bitcoin and maintain large value LN channels.
The thing is -- and I realize the flaws in this argument before I even make it -- I would want to pay 5 cents for every article not to access it, but after I have read it. And it would have to be my decision: if I think it was a high quality article, well researched and reasoned about, perfect. If it turns out to be garbage though? I wouldn't want to pay.
I used to think that, then I realized I have also thrown change on the ground rather than carry it. If the article sucks that just hurts my chances of purchasing again from that author or publication.
> If the article sucks that just hurts my chances of purchasing again from that author or publication.
And this is why most publishers will use subscriptions for their normal content, except some dubious ones who will use clickbait headlines to attract one-time buyers.
I don't think postpaying is a necessary model, there could be a popup saying you don't have a subscription and to read the (full, probably) article is $0.05, would you like to pay this? I would almost certainly click "yes" on a lot of the stuff I don't wind up getting much value out of, and hey, 5c is naturally not that much so it balances out! And maybe that Isaac Chotiner or Bill Simmons (stay with me) 8,000 word'er will be $1. Package deals are easy. In fact, what with d-u-m-b cookie settings, email begs, and rest of the stack of "first 5 seconds" mandatory interactions, right now would be a great time to pop up a less-annoying payment dialog: "[Yes] [Account] [Sign Up] [No]"
You'd spend $5 a day and you'd need $150 per month and yet you aren't willing to pay $5 to subscribe to up to 25 sites... Call me skeptical but I don't see that happening...
Who in their right mind would need micropayments like this?
Of course, any reasonable solution would take, say, $10 from you, and allow you to just press "pay" anywhere a paywall is encountered. Of course it would just auto-pay for articles on sites you put in a whitelist, within a limit you set. All the clearing is done in non-micro amounts, say, monthly.
Such solutions do exist. The problem, of course, is the buy-in from site owners. I suspect that running better ads just has a higher ROI.
India seems to get away with it - with UPI sending around Rs 1 (~ 1.5c) for 'verification' etc. is routine, and as with any UPI transaction it's all free.
The only thing lacking with UPI is proper integration with merchants; large retailers rely on weird locked in services like PhonePe etc. for integration with their billing systems, but the rest seem to use a QR code and manual verification of payment.
> The only thing lacking with UPI is proper integration with merchants; large retailers rely on weird locked in services like PhonePe etc. for integration with their billing systems
My local grocery store (a small mom and pop operation) uses a QR code system with a speaker the recites out loud any new transaction so that both the merchant and the customer can verify it easily.
And besides, integration with merchants is not the job of UPI. It's the job of the application implementing UPI.
> I've pointed out before that the enthusiasm for micropayments is from people who want to collect them, not those who want to pay them.
Consider me one of the mythical latter people. I really really really want to support quality journalism, but I don't spend enough time on any one news site to justify a monthly subscription (most of which are fairly expensive). I would be totally fine spending sub-$1 per article read, though, if that were an option.
I understand why it is not an option, but that's not really the point. If it were, I'd do it. Hell, I'd pay 50c per article just to avoid the annoyance of finding a paywall workaround.
Mandatory note that Bitcoin is not representative for cryptocurrencies, and transaction costs are only high because it's been artificially hindered.
0-conf is also reasonably safe for small amounts. We must always remember that credit cards are perfectly acceptable, despite them only being "confirmed" after several months (so they cannot be reversed any longer).
> The technology for preventing double-spending is incredibly inefficient and slow. Transaction costs are high. Right now, a Bitcoin
This is true of bitcoin. There are better cryptocurrencies which have already solved these problems completely. Have a taste on https://nanospeed.live/ to do a fee-less live transaction in milliseconds.
I support a number of podcasts through Patreon, for a nominal five bucks a month. But that's more than I pay for Netflix and amounts to several hundred per year.
I'm happy to do it. It's worth it to me to support people who are often working full time to produce quality content. But it's no surprise that only a microscopic fraction of people do. It would be nice if a higher fraction gave a tenth as much.
The issue I see is that based on what I've seen with sites that offer both options, it would be $1 per article to push you towards taking the subscription.
I think you're misreading the chart, as $1.55 is a fee on it. They're showing how Paypal's Microtransaction rate becomes more expensive for large transactions.
Huh, does Paypal not get upset at that? Given the stories with PayPal freezing everything on a hair trigger I'd be very worried. Or is it officially allowed?
When I first did this, I ran into problems because PayPal didn't automatically allow more than one of their accounts to be "linked" to the same external bank account. I got written approval for that. Recently I had to update my information with them (after a long-distance relocation), and they were entirely fine with the two account state.
The stories about PayPal freezing everything on a hair trigger are indeed worrying, but after using PayPal to collect the majority of my income for 12-15 years, my attitude is that these stories are just another example of how the internet magnifies the bad/abnormal and buries the normal. There's no doubt that they happen, but in the context of the total amount of activity that PayPal is involved in, my sense is that they are a tiny, tiny fraction.
Myself also (we don't employ that many people). I live in daily (well, OK, monthly) fear that PayPal will remove this option at some point. I do not see how they manage to continue it (though I am glad they do, so far).
PayPal doesn't like micropayment competitors because the easiest way to do micropayments is to force users to load larger denominations in advance onto a wallet. This is bad, because this directly competes with PayPal's core offerings, and is an area where competitors can drive merchant adoption with vastly lower fees.
In the macropayment land, a competitor could come in and offer 45c to process $10 instead of PayPal's 60c. No big deal.
In the micropayment land, a competitor could come in and offer 10c to process $1 instead of PayPal's 33c. MUCH bigger deal.
Micropayments won’t take off because a service to send or collect them is illegal in the US without carding every user and $1mm-per-state legal and licensing fees to be a money transmitter.
This was to be my next company, and it was effectively banned.
We have all of the tech to anonymously demand a real-time irreversible penny payment for a pageload, a download, or an API call. Pervasive, suspicionless financial surveillance demands of the government have made the resulting businesses mostly impossible.
I'm not really sure that the financial model of micropayments, nor the incentives of those accepting such payments, lends itself very well to middlemen, platforms, or rent-seekers.
For anything that hopes to become as ubiquitous as HTTP, it needs to be standard, decentralized and distributed, and extensible, a system where anyone can stand up an endpoint without centralized approval. I think the governmental stranglehold on payments in most of the developed west is going to be a hard barrier to such a thing ever developing, and instead we'll see the continued growth of centralized chokepoint platforms like Facebook, Medium, Uber, PayPal, Square, et c.
It's a real tragedy, because all of the tech is now in place for a total any-to-any model of content, APIs, and payments. It's just illegal.
(And not even "a little bit" settle-your-way-out illegal like web spidering under a super strict interpretation of copyright law, but SWAT-machine-guns-in-your face, "terrorism and child porn and money laundering!" pearl-clutching dozens-of-years-in-jail mega super illegal.)
Because that's, let's face it, is exactly what such a system would be used in a non-negligible way. Bitcoin got a lot of early adopters with Silk Road and the likes.
Buying controlled drugs online is none of terrorism, child porn, or money laundering. I'm not sure that the available data supports your argument.
You'd also be crazy if you thought that e.g. PayPal is not used "in a non-negligible way" for the purchase of controlled drugs or child pornography or sex trafficking victims.
Anything widely used by millions of people is going to be used for the kinds of payments that millions of people make, whether legal or illegal. That's not an argument against the system existing.
> Buying controlled drugs online is none of terrorism, child porn, or money laundering. I'm not sure that the available data supports your argument.
Illegal drugs are a major source of funding for terrorism, e.g. Afghani heroin, or the Latin American cocaine gangs.
> Anything widely used by millions of people is going to be used for the kinds of payments that millions of people make, whether legal or illegal.
It also creates a paper trail which any criminal worth his salt wants to avoid. I have never heard about Paypal being used for child porn or paying a trafficked hooker, the latter is a purely cash based business anyway..
There are a few people pushing micropayments as a means to support independent content creators etc., but most are pushing them because it's well-known that people will spend more if you charge them small amounts many times. See the 99c app plus 99c more for each small thing model. That's the reason why I don't like them: because they're bad for me as a consumer.
Micropayments have already taken off. They're extensively used in Steam (loot boxes, even c2c sales) and on Reddit. Implementations are simple and straightforward: pay someone who keeps your credit a larger amount and spend fractions of it with 1-2 clicks whenever you want. The confusion stems from the fact that people want to sell uninteresting stuff (and items of unknown quality, the "cat in the sack" as we say in German) on the Web and wrongly blame microtransactions.
> ... every Credit Card processor charges a roughly similar rate for processing payments ... 2.9% + 30c of the fixed cost.
In Europe, this is not the case. The EU introduced a cap of 0.2% of the transaction value for consumer debit cards, and 0.3% for credit cards for the amount that banks can charge each other. So as a retailer, you can get 1.6% or better rates here, with no 30c minimum. People use credit cards every day to get bus tickets worth around $1-2 - that would be like 25% of revenue if there was a fixed 30c amount or similar.
This is also why rewards credit cards in Europe are much less common, yes? I feel like most "mid to high end" US cards are in the 1-3% range (or up to 5% in rotating categories), which are effectively funded by the merchant fees--so having a cap on them means no (or much lower) fees. Curious how US folks would react to a 90% reduction in the CC rewards, even if it meant a more efficient system.
I think you overestimate how much an impact merchant fees have on rewards programs. Rewards programs are marketing, they exist to make people feel like they are getting something "back" on their purchases only to lose all of it the moment they are charged interest on their balance. Yes, there are people who pay in full every month and reap the rewards of the program - but don't kid yourself for a second thinking that's the majority of cardholders.
For sure. I never carry a balance on my CC because it's quite possibly the dumbest form of debt to have, I forget that that entire revenue stream exists. As a sibling comment here mentions, rewards programs are effectively the rich getting richer and the poor getting screwed :/
I benefit substantially from rewards cards. But I view them as just one more way for the rich to get (a little bit) richer. If they all just went away, I believe it would be a better world (or at least, a better USA).
I still can't figure out how Amazon's Prime/Chase card can give me back 5% of everything I spend at Whole Foods. It's absurd.
> I still can't figure out how Amazon's Prime/Chase card can give me back 5% of everything I spend at Whole Foods. It's absurd.
For one, it requires a $120/yr Prime membership to get that rate - the non-prime rate is 3% (which is seen on many cards). I have an Amex with an annual fee that gives 6% back at all grocery stores (including Whole Foods), though I also wonder how that can be profitable for them. The break even point where you earn more on the 6% card after the annual fee compared to the no-annual fee 3% card is only a little over $3000/yr (~$60/week), which isnt much even for someone single.
Whole foods is part of Amazon. They can afford to offer the discount because it's their own sales. Internally, Chase probably charge Whole Foods for the cashback.
> Curious how US folks would react to a 90% reduction in the CC rewards, even if it meant a more efficient system.
Probably the same they would feel when a national ID card scheme or a single-payer healthcare system like in literally all other Western countries would be introduced. For a society that takes pride in unrestricted capitalism to eliminate inefficiencies there seems to be a widespread acceptance of utter waste in these areas.
I presume its why rewards cards are much less common, yes. There are some cards that earn "points" at much lower levels. There are also e.g. a Sainsbury's card that earns points in Sainsbury's and a Tesco card that earns points in Tesco.
The Sainsbury's card earns "1 point for every £5 spent elsewhere", 1 point is 0.5p, so that's worth 0.1%, and can only be spent at Sainsbury's or certain other vendors.
I really enjoy the BAT system in Brave. It's often broken, or the person I want to donate to doesn't take BAT tips. It's also hard to convert USD into BAT. But I keep on wanting to use it, and assume that eventually they'll figure it out.
Not entirely related since this is less of a peer-to-peer and more of a "how do we solve things like paying for website views", but I really liked Rivest's approach for "Electronic Lottery Tickets as Micropayments"[1], as it keeps the amount transacted high enough to avoid transaction costs being a material amount, while also meaning that customers aren't charged that much for any individual transaction.
I was a cofounder of a micropayments paywall / subscription startup that operated for about 3.5 years, several years ago. (We shut down due to lack of growth and running out of money)
We mostly tried to sell to news/magazines publishers. The points that the article author brought up are all good points; but what we kept seeing was that it wasn't the consumers who were unwilling to pay, it was the publishers who were unwilling to try a new model. Whenever a site with quality content integrated with us, the percentage of visitors who paid was more decent than you'd imagine. What we couldn't do was convincing a sizable national-level publisher to use us. We had various niche content sites and some local region newspapers integrate with us and they actually saw a pretty good payers to visitors ratio. Some niche content sites even made pretty good revenue using our paywall product.
I would love to hear your story as I am doing something in this space. Would you be willing to drop me a line at mark-at-commandquery.com? Hearing other's experience would really help me validate what I'm working on.
Hey, I am the author of the above tiny rant and what prompted me to write is exactly the case you are describing.
I am working on monetization features for WordPress.com and Tumblr users. Micropayments are one of the cases we are considering and this post came out of our internal discussions.
There is a TON of context I am omitting in that post. In particular, I think that niche sites can run micropayments because early adopters WILL use them.
But the economics of it means that you need to cross the chasm to the early majority in order to break even.
But the early majority will be more conscious about these tiny amounts of cost.
Alternatively, I can be totally wrong, but this whole thread is an awesome discussion :)
I think there are certain "properties" that will need to exist in a truly sustainable micro-payment system. One of which was discussed, but only to expose why the author doesn't think micro-payments will work.
I think the system will need to allow a user to allocate a flat monthly total they're willing to spend on micro-payments. Then, as the user accumulates more and more people they want to pay, the total gets split evenly (or at a designated ratio) across all.
Sort of like the saying "give what you can, take what you need".
I think there are several opportunities here:
1) I think government needs to be involved so they can create a new "designation" so we can provide rules this new designation follows. Most obvious of which would be taxes.
2) I think as the world becomes more and more connected, there will be a real need for tooling to allow users to manage the 10's or 100's of thousands of people they're paying with micropayments.
3) Probably would be good for standards to exist, so interconnected, de-centralized systems can keep "subscribers / payers" up-to-date with the latest from all applicable platforms, with all of the people they're currently paying.
Tons more, but not sure anyone will read this so won't go into too much detail...
I would hate to have microtransactions on the web, could you imagine paying to see every webpage? It doesn't even have to be a large amount, just the psychology of free versus paid is quite powerful to compel the user to not use as much for fear of overspending. I can see it being useful for small transactions such as services but not in the general web.
I imagine that, in the same way content is spread across multiple pages to increase ad-views, the same thing would happen with micropayments.
Best movies of 2020 would be "pay 0.10 for #100-90 and then .10 for each #90-#80 etc". Stratechery would be "pay 0.10 for the above the fold part and then 0.10 for the rest".
Authors used to get paid in micropayments (by the word or books were serialized) so we don't have to guess about the effects. Victorian authors (whose works were all published serialized) stretched things out to the point where modern readers often find them unbearably long.
I had the similar idea, for example you are interested in only certain chapter of a 500 pages book and you pay micropayment to access only that pages of the chapter and the book.
"Could you imagine paying to see every webpage?" Could you imagine you being paid every time you see an ad on the web? It is called revenue sharing and it can range from fraction of a cent up to few cents, it would amount to a lot of money each month and each year.
I can block ads. I can't block micro transactions. But that's not even my main objection, it's more that people will explore the internet less if it's paid per page, and in doing so, the diversity of websites is diminished and the major players become further entrenched.
I'm sort of shocked this isn't already solved. Mozilla, Google, Microsoft, and Apple could cement themselves as the "only viable browsers" by solving this. Here is how I see it:
- Form a consortium (just like the competing banks did in the 50s to create Visa).
- Google, Apple, and Microsoft already have expertise in collecting payments and running services, which they can lend to the consortium.
- Each member creates a UI in their own browser for micropayments that is backed by the consortium.
- The UI has the ability to add funds (processed by the consortium) and set budgets and have little check boxes for "ask me every time" or "automatically pay if below 1 cent" or "allow up to $5 / mo on this web page" or lots of other budget options so that you don't have to think about it every time.
- When you go to a page, they can throw up a request for payment (which if you've already made a budget decision you don't even see as a user), you send a token, they pass the token to the consortium who moves the money from your account to theirs.
- The consortium pays out to web pages when they have earned more than $10 (just like Adwords!) and generates a 1099 or equivalent. They take a piece of pie at this point.
And now if you want an ad free experience, or want to use a site that requires micropayments, you must use one of those browsers. And the site owners can offer both. Send back a payment request, if it fails, show ads.
Heck, even if Google didn't want in, Apple, Mozilla, and Microsoft could pull it off without them (they still have about 38% of the market).
You can secure it using standard crypto. The browser generates a private/public key pair. The website generates a keypair. Both sends the public key to the consortium. When you make a payment, you generate a message that says "I pay foo.com 1 cent" and then sign it. Foo.com takes the message, wraps it up and says, "I want 1 cent" and signs it. The consortium verifies the signatures, makes sure the amounts add up, and then sends back an "OK" response if the user has the funds available.
They key here is that if those four agree on a UI and agree to a central payment processor, they have enough pull that website owners will want to use the service. Especially if there are no per transaction fees.
This also solves the onboarding problem for website owners. It pushes it to the consortium. Who can push it right into their parent companies. Google could automatically tie payment to your Google account, and so could Apple and Microsoft. It would be part of the UI.
In fact it would be a good workaround for Google in the new "do not track me" world.
People block ads because they are annoying, and trackers because they get no perceived benefit.
But payments provide benefit to the user, so they would be more willing to make the payment, thus providing tracking data. And for Google it would help cut Facebook out of the tracking because then they could encourage blocking tracking while accepting payments!
Yea, this is so frustrating. ACH fees are sub cent. Have people ACH money (buy credits) to the provider. Then payments are simply updating a balance. Pay out when a user makes a certain amount.
The legality makes it difficult but with a few hundred thousand you can get all the licenses. It's tough to find a partner bank but with any sort of funding it would be easier to get meetings.
You don't even need to start online. It's my world and what I'd want to do, but brick and mortar stores would kill for lower fees. Could start in a single state at physical retail and really cut down on the MSB licenses needed.
Payers don't want micropayments. They don't want them because each time you spend, you have to make a decision. This leads to decision fatigue. Nobody wants to make a million individual tiny purchasing decisions.
This is why Netflix is so successful, but Apple's pay-by-the-episode model is far less engaging, even though I wager for most people it'd be much cheaper.
When the 'micropayment' idea first came around decades ago, I got the impression that it would let us voluntarily send a little change to individuals who'd posted something that was 'worth' looking at/hearing to us.
Had that option ever arisen, I'd have 'sent' x cents directly to the account of hundreds of creators. Because it was simple and person-to-person. Now and then, I'd have 'sent' x dollars to -someone- who'd created something of extraordinary value ... to me.
In my view, the rewards collected by brokers are usually not deserved, and the rewards for streamers highway robbery. A 'facilitator' at cost+ (limited) is a different ballgame.
The idea - simple, direct, voluntary, user-chosen 'rewards' P2P - never became a reality. I regret that. A cent, a nickel, a dime - anyone could play - from 100,000 people in a year (or even longer-tail) amounts to a very tangible reward, and valuable feedback. I don't need anyone telling me what something is worth to me; the creator does.
"Direct to creators" means from your (financial institution of some type) account direct into the equivalent for the creator. No middle-men, close to zero fee, no cut, no membership.
For a while in 2018, I did exactly that using Dogecoin. Creators would post their DOGE addresses. I'd chuck in $5, pay <$0.001 in TX fees, and the recipient would receive 100% of it.
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[ 3.6 ms ] story [ 237 ms ] threadStreaming music consists of a single transaction that some platform logic would then divide behind the scenes. The consumer isnt forced to make multiple payment decisions. If and when they are, it probably won't work. Even having to pick and choose what portion of some pool of funds one wants to give to which creator creates cognitive friction that I don't think we've seen solved yet.
Humble Bundle would probably have good stats on that: how many people bother to alter the default proportions of the devs/charity/HumbleBundle split?
That said, I'm not in agreement overall. I think there are likely many things that can be billed in "sub-minimum-transaction-increments," it's just that they only become worth charging when they exceed the floor. So I guess in my head most of it is tracking "microdebt," and only sometimes is combining enough of the outstanding "debt" enough for it to be worth a payment.
It's basically a permutation seen in every game with (much hated) in-game currency. Maybe there's dirt cheap things to buy, but you still have to exchange to IGC at a $1:n floor.
There's some overhead at the sending/receiving institution as well, but it has a similar order of magnitude (0.0005-0.005€/txn mostly depending on your scale because of the fixed costs); the total cost for a proper interbank transfer is less than a cent if you do things right. The price is mostly determined by other factors, not the cost - it can be (and often is) zero for competitiveness purposes, recouping the costs from other services, or it can be something like the same 30 cents as the original article lists if someone is willing to pay that.
Chargebacks and distpute resolution and all that stuff is just something people in the us rely on, because using credit cards makes fraud easy. If I use my chip and pin card, then I can be sure that I did the payments. If I rely on a number printed on my card that I have to give someone, then fraud is just too easy.
I wish all online credit card transactions would use 3D Secure, but for some reason they don't.
The same for when people complain that european bank cards don't have any cashback or other "free" stuff associated with them. People don't realise, that they themselves are paying for that, no? I'm really glad the EU legislated caps on card transaction fees, because moving some bits around can only cost so much.
Debit cards come with chargebacks. Chargebacks are a feature provided by the payment networks themselves, so it doesn't matter whether you're using a credit or debit card.
> I wish all online credit card transactions would use 3D Secure, but for some reason they don't.
You realize it's the same kind of “free stuff that comes with a hidden cost” you are complaining about in your rant don't you?
A shorter way to say that is that something can fail thousands of times, but only has to succeed once. If the right technical, social and business factors come together, you get working micropayments.
It is pretty transparent to the user, there is no per-transaction fixed cost (though the margin taken by Ad provider is pretty huge), and some people are living pretty nicely with it.
I agree with the various points this article makes, but it doesn't mean micro-payments are a no go. Just make it as seamless as ads!
The article mentions subscription, but doesn't mention the possibility of subscription-based micro-payments?
That's what scroll.com, and I believe there solution has none of the issues mentioned in this article, even though it would still make sense as a 402 Payment Required! Of course you can't generalize scroll.com everywhere, for many reasons. But I believe /that/ idea is a start of making micro-payments a thing.
https://en.wikipedia.org/wiki/Google_Contributor
If you removed those two assumptions, micropayments make sense.
Crypto currency actually can solve those problems elegantly. You can have low transaction costs. And, transactions can be anonymous and irreversible (depending on the currency).
Critics will rightly point out those promises are not always kept (ethereum gas prices, for example), but they are the goals. Lower transaction fees, I would assert, are not the goals of PayPal.
The problem is not technical. It's that there isn't mass adoption. If a well funded startup did a "Fresno Drop" they might be able to overcome that. That would be interesting and could be very effective.
https://99percentinvisible.org/episode/the-fresno-drop/
Full disclosure: I'm working on such a system and have a patent pending on the process.
This is a misunderstanding of how mining works. It takes virtually zero energy to create a block (ie. commit a transaction). However, it takes massive amounts of energy for your block to be considered valid. This is because each block also comes with a block subsidy (currently 6.25BTC), which many miners are competing for.
https://qbix.com/token
With cash you don't have that problem - the transaction is physcial and immediate. But I doubt any micropayment system will get approval to transact money without anti-money laundering laws and transaction reversibility.
I've pointed out before that the enthusiasm for micropayments is from people who want to collect them, not those who want to pay them. Unlike credit cards, which, when introduced, were easy to sell to buyers but hard to sell to merchants, since the merchant pays fees.
Cryptocurrencies are not a magic bullet here. The technology for preventing double-spending is incredibly inefficient and slow. Transaction costs are high. Right now, a Bitcoin transaction costs at least US$5. It's been as high as $20.
That's right, it will all cost the same as a Bitcoin transaction.
And how about receiving a lightning payment? Well... The merchant need to have a balance so he can accept your payment(!) Yes, that's another Bitcoin transaction right there. Or if you're lucky you can find someone who'll give you liquidity (for a fee of course).
It's debatable if micropayments will ever take off, but lightning never will.
I don't think any of them make micro payments easy right now, but throughput is not a real problem until transaction volume goes WAY up.
What is bitcoin's throughput? 2MB every -10 minutes-? That's less than 3KB/s. Let's not do this whole dance where the real numbers never come up in all the fear mongering.
A single 10TB hard drive would take over -92 YEARS- to fill up at that rate. And again, most people don't ever need to sync with the chain, they let servers do it for them.
What is your point?
Yes, there is a risk of double-spending, but since this is a small amount, the cost of the attack may be higher than the benefit. The payment processor can also deploy more full nodes in different geographic locations to monitor and detect potential double-spending transactions in the transaction memory pool.
And then a million fraudulent microtransactions will add up. Of course, that would never happen in practice, because the Blockchain cannot handle a million transactions in any reasonable time frame.
If the attacker sends the legit transaction and double-spending one at the same time, it will be detected due to the few seconds wait by the payment processor.
and in fact it is quite common to accept "double-spending" since that is really the only way to increase fees to push through a "stuck" transaction. Otherwise you have to wait an indeterminate (potentially forever) period of time until it exits the mempool of all network participants
[1] https://bitcoin.stackexchange.com/questions/81624/can-two-or...
This page (https://github.com/ethereum/wiki/wiki/Design-Rationale) contains a good overview of the UTXO vs Account model with each's strengths and weaknesses.
There is a nice article which hopefully somebody can link that explains that visa was a success because merchants reduced their costs, too. They had to do informal credit accounting for all their clients who only paid for the purchased goods once a month. With visa, that accounting position, which could be a full-time employee, wasn't needed any more. Furthermore, they reduced their risk of clients defaulting on those micro loans.
There is also a time savings. You don’t need employees counting and recounting the cash with witnesses when the cashier changes.
Cash needs to be physically secured. A cash register full of credit card receipts is pretty worthless.
You're right about crypto not being a magic bullet though.
I'd suspect each BTC payment is actually $60-70. When block rewards end, someone's gonna have to pay that.
Ignoring the fact that's going to occur in 2140, what you've stated is simply not true, users decide what fees to pay, no one else determines the price.
I send zero fee tx's regularly. If you are in no rush the cost ranges from tiny to non-existent sending money across the planet.
It's never going to be used for micro transactions without a second layer but the whole premise of this comment is out of whack with the reality.
The actual cost of a transaction can be represented as the following equilibrium:
(E * pkWh) = F + (R * pBTC)
- E is the average amount of power required to process one transaction, a function of hash rate (~700kWh)
- pkWh is the average price paid by miners for power (~0.08 $/kWh)
- F is the average fee paid for a transaction directly (~5)
- R is the average block reward per transaction (6.25/3500)
- pBTC is the market price of a Bitcoin (~9500)
If (F + (R * pBTC)) is ever less than (E * pkWh) as happened after the halving, something's gotta give. Either the fee has to go up, the price of a Bitcoin has to go up, or the hash rate will drop. The halving demonstrated (3).
Make no mistake, though, the cost of a bitcoin payment is ~$50, you just have to distribute it over the parameters.
You didn't think miners were given you "almost free" transactions for their health or something did you? Your very-low transaction fee is the tip of a giant cost-burg.
The only way it doesn't waste inordinate amounts of power and support a reasonable number of transactions is if you pretend.
Waste? It's evidently not waste, because miners are compensated. Missed opportunities for that energy to have done work on something else, or at least done more efficiently so the surplus could do something else? Perhaps, but that can be said of anything. I'd instead criticize the far greater missed opportunities of not coating deserts with solar panels, not peppering the world with nuclear reactors, not having satellites beaming microwaves down, etc. etc. We'll never become a Type 1 civilization with attitudes suggesting we lower global energy consumption or try to allocate it only in approved ways.
Well, I mean, if you're trying to launder money or manage a ransomware product, PayPal and Visa aren't great candidates.
> Waste? It's evidently not waste, because miners are compensated.
People are compensated for all sorts of wasteful garbage. I could pay some dude to dump gasoline directly into the rain gutters. Or move a mountain 6 feet to the left using only a shovel. That doesn't instantly turn it into a productive activity.
> Missed opportunities for that energy to have done work on something else, or at least done more efficiently so the surplus could do something else? Perhaps, but that can be said of anything.
There's no massive energy surplus. If we turned off the 55TWh/yr that's being burned on multiplayer Excel, it would stop a non-trivial percentage of our greenhouse gas emissions.
> I'd instead criticize the far greater missed opportunities of not coating deserts with solar panels, not peppering the world with nuclear reactors, not having satellites beaming microwaves down, etc. etc.
Sure, I'm down. Sounds great!
> We'll never become a Type 1 civilization with attitudes suggesting we lower global energy consumption or try to allocate it only in approved ways.
Not with that attitude :)
To me, it's like there's a giant smoldering tire fire in the town square, and everyone's walking around praising the tire fire for the nice warm glow it creates.
Any delta is due to the 45% drop in hash rate after the halving. Extensive methodology is provided.
None of those get easier with micropayments. If anything they get more difficult.
It might be just out of my ignorance for what the downsides are, but quite often I do wish I had a way to make micropayments, and I feel like lots of others do feel similarly.
and if you just leave one big channel with lots of money in it, then you end up with this fun situation! Hope you don't have a power outage... ever.
https://coinspice.io/news/bitcoiners-warn-after-user-documen...
BTW a follow-up to the story you link is this one: https://cointelegraph.com/news/guy-who-lost-4-bitcoin-has-re...
Sample size of one, but I do!
I frequently come across paywall'd articles I'd like to read. I'm not willing to add more subscriptions to my life, but it would be great if I could pay 25¢ just for access to the one article. If the payment process was easy, I'd use it a lot!
If such a hub does this too much then they'll have trouble getting others to commit funds to a channel to them.
More likely users won't have to deal with all that because there will be micropayment wallet providers that can aggregate the transaction costs of buying bitcoin and maintain large value LN channels.
And this is why most publishers will use subscriptions for their normal content, except some dubious ones who will use clickbait headlines to attract one-time buyers.
Of course, any reasonable solution would take, say, $10 from you, and allow you to just press "pay" anywhere a paywall is encountered. Of course it would just auto-pay for articles on sites you put in a whitelist, within a limit you set. All the clearing is done in non-micro amounts, say, monthly.
Such solutions do exist. The problem, of course, is the buy-in from site owners. I suspect that running better ads just has a higher ROI.
The only thing lacking with UPI is proper integration with merchants; large retailers rely on weird locked in services like PhonePe etc. for integration with their billing systems, but the rest seem to use a QR code and manual verification of payment.
My local grocery store (a small mom and pop operation) uses a QR code system with a speaker the recites out loud any new transaction so that both the merchant and the customer can verify it easily.
And besides, integration with merchants is not the job of UPI. It's the job of the application implementing UPI.
Consider me one of the mythical latter people. I really really really want to support quality journalism, but I don't spend enough time on any one news site to justify a monthly subscription (most of which are fairly expensive). I would be totally fine spending sub-$1 per article read, though, if that were an option.
I understand why it is not an option, but that's not really the point. If it were, I'd do it. Hell, I'd pay 50c per article just to avoid the annoyance of finding a paywall workaround.
Many CCs are great for micropayments, its just bitcoin that sucks - it shouldn't be that popular.
0-conf is also reasonably safe for small amounts. We must always remember that credit cards are perfectly acceptable, despite them only being "confirmed" after several months (so they cannot be reversed any longer).
This is true of bitcoin. There are better cryptocurrencies which have already solved these problems completely. Have a taste on https://nanospeed.live/ to do a fee-less live transaction in milliseconds.
Newsflash: perhaps I'd like to support more than a couple sites. Those coffees add up.
Also, I don't do Starbucks coffee. It's overpriced.
I'm happy to do it. It's worth it to me to support people who are often working full time to produce quality content. But it's no surprise that only a microscopic fraction of people do. It would be nice if a higher fraction gave a tenth as much.
It's absolutely a fork in the eye to record labels and AdSense. :)
Would you pay $5/month indefinitely to every site that has an article linked to on HN that you read? No, didn't think so.
Would you pay 5 cents per article read though? If the technical possibility to do that existed?
I'll never subscribe to the new york times because I'm not even on the same continent and I don't care about their news generally.
They could get some pocket change out of me when HN links to them though.
https://www.paypal.com/us/smarthelp/article/what-are-micropa...
https://www.paypal.com/us/webapps/mpp/merchant-fees#fixed-fe...
Without this, my bootstrapped company that employed over 15 people would not have been possible.
0.05x + 0.05 = 0.029x + 0.30 : x=$11.90
Fees would be:
$0.10 vs $0.33 on $1
$0.15 vs $0.36 on $2
$0.30 vs $0.45 on $5
$0.55 vs $0.59 on $10
$1.55 vs $1.17 on $30
$1.55 is not a micropayment.
Been doing that for around a decade. Make a substantial fraction of my income from US$1 payments.
The stories about PayPal freezing everything on a hair trigger are indeed worrying, but after using PayPal to collect the majority of my income for 12-15 years, my attitude is that these stories are just another example of how the internet magnifies the bad/abnormal and buries the normal. There's no doubt that they happen, but in the context of the total amount of activity that PayPal is involved in, my sense is that they are a tiny, tiny fraction.
In the macropayment land, a competitor could come in and offer 45c to process $10 instead of PayPal's 60c. No big deal.
In the micropayment land, a competitor could come in and offer 10c to process $1 instead of PayPal's 33c. MUCH bigger deal.
This was to be my next company, and it was effectively banned.
We have all of the tech to anonymously demand a real-time irreversible penny payment for a pageload, a download, or an API call. Pervasive, suspicionless financial surveillance demands of the government have made the resulting businesses mostly impossible.
Why not use “credits” where buyer makes a single payment and then uses those credits to make smaller transactions
For anything that hopes to become as ubiquitous as HTTP, it needs to be standard, decentralized and distributed, and extensible, a system where anyone can stand up an endpoint without centralized approval. I think the governmental stranglehold on payments in most of the developed west is going to be a hard barrier to such a thing ever developing, and instead we'll see the continued growth of centralized chokepoint platforms like Facebook, Medium, Uber, PayPal, Square, et c.
It's a real tragedy, because all of the tech is now in place for a total any-to-any model of content, APIs, and payments. It's just illegal.
(And not even "a little bit" settle-your-way-out illegal like web spidering under a super strict interpretation of copyright law, but SWAT-machine-guns-in-your face, "terrorism and child porn and money laundering!" pearl-clutching dozens-of-years-in-jail mega super illegal.)
Because that's, let's face it, is exactly what such a system would be used in a non-negligible way. Bitcoin got a lot of early adopters with Silk Road and the likes.
You'd also be crazy if you thought that e.g. PayPal is not used "in a non-negligible way" for the purchase of controlled drugs or child pornography or sex trafficking victims.
Anything widely used by millions of people is going to be used for the kinds of payments that millions of people make, whether legal or illegal. That's not an argument against the system existing.
Illegal drugs are a major source of funding for terrorism, e.g. Afghani heroin, or the Latin American cocaine gangs.
> Anything widely used by millions of people is going to be used for the kinds of payments that millions of people make, whether legal or illegal.
It also creates a paper trail which any criminal worth his salt wants to avoid. I have never heard about Paypal being used for child porn or paying a trafficked hooker, the latter is a purely cash based business anyway..
https://www.gloebit.com/
In Europe, this is not the case. The EU introduced a cap of 0.2% of the transaction value for consumer debit cards, and 0.3% for credit cards for the amount that banks can charge each other. So as a retailer, you can get 1.6% or better rates here, with no 30c minimum. People use credit cards every day to get bus tickets worth around $1-2 - that would be like 25% of revenue if there was a fixed 30c amount or similar.
I still can't figure out how Amazon's Prime/Chase card can give me back 5% of everything I spend at Whole Foods. It's absurd.
For one, it requires a $120/yr Prime membership to get that rate - the non-prime rate is 3% (which is seen on many cards). I have an Amex with an annual fee that gives 6% back at all grocery stores (including Whole Foods), though I also wonder how that can be profitable for them. The break even point where you earn more on the 6% card after the annual fee compared to the no-annual fee 3% card is only a little over $3000/yr (~$60/week), which isnt much even for someone single.
Probably the same they would feel when a national ID card scheme or a single-payer healthcare system like in literally all other Western countries would be introduced. For a society that takes pride in unrestricted capitalism to eliminate inefficiencies there seems to be a widespread acceptance of utter waste in these areas.
The Sainsbury's card earns "1 point for every £5 spent elsewhere", 1 point is 0.5p, so that's worth 0.1%, and can only be spent at Sainsbury's or certain other vendors.
[1]: https://people.csail.mit.edu/rivest/pubs/Riv97b.pdf
We mostly tried to sell to news/magazines publishers. The points that the article author brought up are all good points; but what we kept seeing was that it wasn't the consumers who were unwilling to pay, it was the publishers who were unwilling to try a new model. Whenever a site with quality content integrated with us, the percentage of visitors who paid was more decent than you'd imagine. What we couldn't do was convincing a sizable national-level publisher to use us. We had various niche content sites and some local region newspapers integrate with us and they actually saw a pretty good payers to visitors ratio. Some niche content sites even made pretty good revenue using our paywall product.
Large companies have absolutely no reason to partner with an unknown. Worse than NIH, is "why fund a parasite on top of our business model?"
There is a TON of context I am omitting in that post. In particular, I think that niche sites can run micropayments because early adopters WILL use them. But the economics of it means that you need to cross the chasm to the early majority in order to break even. But the early majority will be more conscious about these tiny amounts of cost.
Alternatively, I can be totally wrong, but this whole thread is an awesome discussion :)
I think the system will need to allow a user to allocate a flat monthly total they're willing to spend on micro-payments. Then, as the user accumulates more and more people they want to pay, the total gets split evenly (or at a designated ratio) across all.
Sort of like the saying "give what you can, take what you need".
I think there are several opportunities here:
1) I think government needs to be involved so they can create a new "designation" so we can provide rules this new designation follows. Most obvious of which would be taxes.
2) I think as the world becomes more and more connected, there will be a real need for tooling to allow users to manage the 10's or 100's of thousands of people they're paying with micropayments.
3) Probably would be good for standards to exist, so interconnected, de-centralized systems can keep "subscribers / payers" up-to-date with the latest from all applicable platforms, with all of the people they're currently paying.
Tons more, but not sure anyone will read this so won't go into too much detail...
Best movies of 2020 would be "pay 0.10 for #100-90 and then .10 for each #90-#80 etc". Stratechery would be "pay 0.10 for the above the fold part and then 0.10 for the rest".
Authors used to get paid in micropayments (by the word or books were serialized) so we don't have to guess about the effects. Victorian authors (whose works were all published serialized) stretched things out to the point where modern readers often find them unbearably long.
- Form a consortium (just like the competing banks did in the 50s to create Visa).
- Google, Apple, and Microsoft already have expertise in collecting payments and running services, which they can lend to the consortium.
- Each member creates a UI in their own browser for micropayments that is backed by the consortium.
- The UI has the ability to add funds (processed by the consortium) and set budgets and have little check boxes for "ask me every time" or "automatically pay if below 1 cent" or "allow up to $5 / mo on this web page" or lots of other budget options so that you don't have to think about it every time.
- When you go to a page, they can throw up a request for payment (which if you've already made a budget decision you don't even see as a user), you send a token, they pass the token to the consortium who moves the money from your account to theirs.
- The consortium pays out to web pages when they have earned more than $10 (just like Adwords!) and generates a 1099 or equivalent. They take a piece of pie at this point.
And now if you want an ad free experience, or want to use a site that requires micropayments, you must use one of those browsers. And the site owners can offer both. Send back a payment request, if it fails, show ads.
Heck, even if Google didn't want in, Apple, Mozilla, and Microsoft could pull it off without them (they still have about 38% of the market).
You can secure it using standard crypto. The browser generates a private/public key pair. The website generates a keypair. Both sends the public key to the consortium. When you make a payment, you generate a message that says "I pay foo.com 1 cent" and then sign it. Foo.com takes the message, wraps it up and says, "I want 1 cent" and signs it. The consortium verifies the signatures, makes sure the amounts add up, and then sends back an "OK" response if the user has the funds available.
They key here is that if those four agree on a UI and agree to a central payment processor, they have enough pull that website owners will want to use the service. Especially if there are no per transaction fees.
This also solves the onboarding problem for website owners. It pushes it to the consortium. Who can push it right into their parent companies. Google could automatically tie payment to your Google account, and so could Apple and Microsoft. It would be part of the UI.
In fact it would be a good workaround for Google in the new "do not track me" world.
People block ads because they are annoying, and trackers because they get no perceived benefit.
But payments provide benefit to the user, so they would be more willing to make the payment, thus providing tracking data. And for Google it would help cut Facebook out of the tracking because then they could encourage blocking tracking while accepting payments!
The legality makes it difficult but with a few hundred thousand you can get all the licenses. It's tough to find a partner bank but with any sort of funding it would be easier to get meetings.
You don't even need to start online. It's my world and what I'd want to do, but brick and mortar stores would kill for lower fees. Could start in a single state at physical retail and really cut down on the MSB licenses needed.
This is why Netflix is so successful, but Apple's pay-by-the-episode model is far less engaging, even though I wager for most people it'd be much cheaper.
As long as you can't do payments well under $1 things are doomed.
Just look at camming sites.
You buy 100tokens for 10€ and can "tip" people ¢10 if you like.
This works pretty well, and I think people would be happy to pay like ¢10-¢50 en masse for all kind of stuff if it was possible.
Had that option ever arisen, I'd have 'sent' x cents directly to the account of hundreds of creators. Because it was simple and person-to-person. Now and then, I'd have 'sent' x dollars to -someone- who'd created something of extraordinary value ... to me.
In my view, the rewards collected by brokers are usually not deserved, and the rewards for streamers highway robbery. A 'facilitator' at cost+ (limited) is a different ballgame.
The idea - simple, direct, voluntary, user-chosen 'rewards' P2P - never became a reality. I regret that. A cent, a nickel, a dime - anyone could play - from 100,000 people in a year (or even longer-tail) amounts to a very tangible reward, and valuable feedback. I don't need anyone telling me what something is worth to me; the creator does.
They have a browser add-on that does streaming micropayments directly to creators as you view the content.
"Direct to creators" means from your (financial institution of some type) account direct into the equivalent for the creator. No middle-men, close to zero fee, no cut, no membership.