Micropayments

Abstract

Open data networks, such as the Internet and the wireless data networks, allow low-cost delivery of content (information) and services to a huge population (market). The production costs of content and services are often small and largely independent of the number of customers. Therefore, producers of content and services provided to many customers often want to charge very small amounts — if the payment system allows it (with reasonable overhead). Payment by credit cards, which is the common method for online consumer purchasing, involves substantial minimal fee per transaction, e.g., 20 cents, and therefore is not applicable for charging smaller amounts. This provides one definition of the micropayments, as charging amounts smaller (or close to) the minimal credit card transaction fees (of about 20 cents). There are other difficulties in using credit cards for low-value transactions, namely, substantial delay and user involvement, and the potential for disputes resulting in refunds, chargebacks, and substantial handling costs.