Micropayments to DonationCoder could be possible through new PayPal service

[superticker]

PayPal is going to introduce a new, low-cost, micropayment service. This would allow making small payments to DonationCoder instead of using DonationCredits as it does now. Yahoo news article: PayPal introduces micropayment service

Honestly, I don't mind using DonationCredits. I usually buy some (say $25 worth) when I want to donate for a new software program I'm using. I give $20 for the program, and I keep the other $5 for future individual donations.

I wonder if the PayPal micropayment service would be more popular than the DonationCredits that DonationCoder uses now? Not everyone uses PayPal, although many people do.

[mouser]

Very interesting!

I'm anxious to read more details, and i think the world would be a better place if one of these micro-payment systems takes off and hits the mainstream.

I have written before that i think the key thing is not the "micro" small amount part, but making it trivial, safe, and fast to send money.  PayPal has already gone a long way to doing that, so this could be a nice step forward.

[Renegade]

HALLELUJAH~!

There is a God~!

All is not lost~!

There is hope for humanity~!

Check this~!

PayPal offers support for Micropayments to merchants for US to US, GB to GB, AU to AU, and EU to EU transactions for Business and Premier accounts. This feature is offered at a special rate of 5% + $0.05 per transaction.

While being fast & easy is crucial, actually having micropayments available from a trusted company like PayPal is revolutionary~!

This will change the face of the Internet for so many people. It will make it possible for developers and content producers to sell things at a reasonable price and to monetize what otherwise had to be free. This will make it possible to do so much more than is possible now.

So basically, you can offer something for $0.25 now, and take home almost $0.20! Before you'd end up in the hole.

Really, I think this is a fantastic thing for everyone.

Thank you for posting that~!

[Renegade]

This makes it possible to offer software on new terms to developing economies where you simply could not sell anything. Now, for very small amounts, you can offer software on a lease basis for small amounts of time, like a week for $0.50 or $1.00 or whatever. This makes it affordable! It opens whole new markets!

Wow! The possibilities are just staggering~!

[app103]

If they make this really easy to do, this could be huge for bloggers and potentially pay better than pay-per-click ads.

[mouser]

I'm not sure how much this really solves.  If it's true that the real problem with raising money through micropayments is not the amount but the hassle, then paypal already makes it pretty easy and safe to pay someone if you have a paypal account.  so the question is, will this bring in more users who are not already paypal users.  if not, it doesn't do very much.  the key has to be to have a payment system that EVERYONE has an account on, and everyone feels completely safe using, and that takes no time or effort.  Let's see if they can advance the ball on this -- it would be great if so.

[Renegade]

PayPal already has a huge user base, so it's a start. Hopefully it will put pressure on other systems like WorldPay to come up with the same kind of system.

It's about time though. It's been a long time coming.

But think of stuff like this: Imagine someone that needs to take screenshots, finds ScreenshotCaptor, and pays $0.25 to get access to take 25 screenshots. Mouser -- you are entirely right about speed & ease. Because at that point, nobody cares about the $0.25; the only barrier is how difficult it is to actually pay it.

For those that use PayPal, it really is that easy. I use PayPal extensively to pay for things, and it's SOOOOOO easy.

1) I get a button.
2) I click it.
3) I log in.
4) I click the "Pay Now" button.
5) I get what I'm paying for.

THAT is as easy as it can be. It really can't be much easier. Boiling that down, the process is:

1) Present payment option.
2) User clicks/chooses payment option.
3) User makes payment (login and pay)

It cannot be any easier in any practical way. I think with PayPal, the solution is here.

[mouser]

there are going to be things where such tiny payments are useful.. donationcoder won't benefit from those things since i think only really specialized services are going to really have use for such tiny micro-transactions.  i certainly have no plans on making any of my programs charge small amounts on a per usage basis -- i'm a fan of the lifetime no-nag license concept.

i think the benefit to most indie developers if such financial services take off is what it will to increase the userbase of people who feel comfortable just clicking to donate money and pay something, and lay the groundwork for broad acceptance of paying for things this way.

The donationware concept would be hugely more successful if everyone on the planet had an account and feels completely comfortable clicking a quick button to quickly send $1, $5, $10, $50 bucks to pay for something, confident that they aren't putting themselves at risk, and can get a refund if they change their mind.

Making such actions easy and safe is the key.  But the success of large scale micro-transaction services like this one are an important step towards moving us down this path, so more power to it!

[Renegade]

I didn't mean to suggest that you should charge at DC. I just wanted a familiar example of something everyone knows here.

But yeah, this exciting. I can see so many opportunities opening up.

[J-Mac]

Renegade,

One potential problem: PayPal fees. PayPal isn't in this for the fun of it. When you make PayPal payments to a developer that developer is paying a fee for the convenience. Payments among friends or family members are free of fees but businesses pay the way with PayPal. While that kind of system might make sense for regular software developers and other online businesses, small coders taking micropayments would get eaten alive by fees I would think.

Jim

[mouser]

While that kind of system might make sense for regular software developers and other online businesses, small coders taking micropayments would get eaten alive by fees I would think.

it could be quite the opposite if done right, and that's the KEY to this being a "new" service specialized for micro-payments.

if the current standard minimum paypal fee is 25 cents (and that fee goes up to $1 on a $25 payment) then a STANDARD paypal payment for anything less than 50 cents is dwarfed by fees.

BUT the idea of all micro-payment systems is that people put in larger chunks of money, the fee is taken from that, and then micro-transactions take place "virtually" with little or no transaction fees.

SO, in this case a person would deposit $25 and pay a fee on that ($1) and then be able to make as many micro-transactions of as little as a couple of cents, without anyone paying any further fees.

That's the idea, and thats what makes a micro-payment system special.

[Renegade]

Amazon has a similar system:

http://aws.amazon.com/fps/

[barney]

While a micropayment system is intriguing, there's another consideration - longevity.  (Well, there's international or near-international coverage, but that's for later.)

PayPal is in process of killing off its existing Plugin process(es).  One of those processes, one I've used since its inception, is single-use or single-payee (recurring billing) cards.  After two-plus years, they've presumably decided it's not sufficiently profitable, so it's getting eighty-sixed. 

That's unsettling for me, considering the number of commercial sites get raided of consumers' financial data.

Same thing could happen with a micropayment system:  folk come to depend upon it, then it gets retired - for perfectly understandable reasons, but that doesn't help anyone who might have come to rely upon it.  If their business model is even moderately dependent upon micropayments, they'll become collateral damage of someone else's (in this case, PayPal's) valid business decision.

[Renegade]

I think the key will be with making software available in the developing world for low rental-pricing. That market is currently ignored, and "cheap" is the key there. With traction there, the model will succeed. The developed world is kind of small in comparison, and would require a slightly different approach, but with solid adoption across a broad array of niches, the model can work. Adoption in a few major sectors would also be enough to entrench the model.

However, adoption in major sectors is less likely as they are generally slow to adopt new ideas or marketing models. The guy responsible for the packaged software model was basically driven out of IBM. Small developers are the ones responsible for the shareware marketing model that almost all software follows now.

I think adoption will be bottom-up. Only the gaming industry is poised to take advantage of it right now (out of the major sectors) as they tend to be more inventive. Oh, and porn. Adoption in the porn sector would guarantee success. e.g. Buy a 20 pic gallery for $0.50 instead of a subscription. etc. etc. etc.

I'm still hopeful though. I already have the plans in my head to take advantage of it. I only need the time now.

[jojo99]

Having worked for a defunct micro-payment company in the past, I have some experience with the internal issues and related problems.

Many users don't/didn't like to pre-deposit a sum of money that micro-payments are drawn from.  Then there are those who forget to replenish their account and get pissed off when they can't buy something they want.  They didn't get a notification o flow balance, they claimed.  And if the company goes under, they generally lose any money that the company is holding. 

Believe me, there are a myriad of vendors that want to sell products and services for $0.10 to $3.00.  We had a lot of people selling original music tracks at $0.10- $0.25 each, undercutting Apple and others.  Some were rally good.  There were people selling stock photography.  People selling business intelligence articles.  People selling poems.  And then there is the porn market, but I won't go there.

But I think some of you are over-complicating what Paypal is doing.  It sounds like they are simply extending trust to the user up to some $$ amount ($10 is mentioned in the article) to avoid the credit card fees on small transactions.  When you have spent the $10, they will then issue a transaction against your credit card (or maybe do a withdrawal on your bank account) to cover the $10.  This way, they can stick it to the major CC companies which to-date, have refused to modify their fee structures to support micro-payments (thought I seem to recall reading something not to long ago that MC or Visa was working on something).

[Renegade]

Having worked for a defunct micro-payment company in the past, I have some experience with the internal issues and related problems.

Many users don't/didn't like to pre-deposit a sum of money that micro-payments are drawn from.  Then there are those who forget to replenish their account and get pissed off when they can't buy something they want.  They didn't get a notification o flow balance, they claimed.  And if the company goes under, they generally lose any money that the company is holding. 

Believe me, there are a myriad of vendors that want to sell products and services for $0.10 to $3.00.  We had a lot of people selling original music tracks at $0.10- $0.25 each, undercutting Apple and others.  Some were rally good.  There were people selling stock photography.  People selling business intelligence articles.  People selling poems.  And then there is the porn market, but I won't go there.

But I think some of you are over-complicating what Paypal is doing.  It sounds like they are simply extending trust to the user up to some $$ amount ($10 is mentioned in the article) to avoid the credit card fees on small transactions.  When you have spent the $10, they will then issue a transaction against your credit card (or maybe do a withdrawal on your bank account) to cover the $10.  This way, they can stick it to the major CC companies which to-date, have refused to modify their fee structures to support micro-payments (thought I seem to recall reading something not to long ago that MC or Visa was working on something).

-jojo99 (August 14, 2010, 10:39 PM)

Ah! Excellent to have an expert on board then!

Feel free to elaborate on anything as I'm quite interested!