Mac Musings

Making Micropay Work

The Case for Micropayments, Conclusion

Daniel Knight - 2001.06.22 -

The Internet needs micropayments. There is too much potential for small online transactions for the need to remain unfilled.

Micropayments have generally been defined as any financial transaction under $10, although we have been particularly interested in sub-$1 transactions. Thanks to programs such as PayPal, payments as low as a few dollars are now possible at reasonable cost, but we still need to drop below that level.


Perhaps the most compelling argument for micropay is Napster. There's been much talk about them going to a subscription model, which might cost you $6-7 a month. But what about the fan who just wants to download a few MP3s?

With a sound micropay system, Napster could profitably sell tracks for maybe 15¢ each.

Snail Mail

Did you know you can order postage stamps online (at least here in the States)? I don't know if the USPS has a minimum order (they were having technical problems when I logged on), but they've got to take it on the chin if you pay for $5 worth of stamps with a credit card. Micropay would improve their bottom line.

Online Archives

Ever gone to a newspaper site looking for an archive article, only to find they want to charge you anywhere from $1.25 to $2.95 to buy a copy of the article? And newspapers aren't alone in asking money for archive content.

Part of the reason for the horrendous cost comes from the overall costs of running a website. If they were taking in a penny or so per hit, they might keep "archive" material accessible for a longer period of time. (For some newspapers, an article can be archived and only available at extra cost, if at all, the following day.)

Micropay would also reduce the overhead for handling small transactions, making it feasible to sell single articles for 25¢ to a dollar.

Web Sites

Using micropay to surf the Web at a penny a page sounds very lucrative to those of us publishing on the Web, but it's not without potential problems.

MicroPay eWallet for - Balance: 473 credits
Logged in | Manage account | Pay for this page? Yes / No

First, you've got to secure your ewallet. When you leave the computer, log out of micropay to prevent the kids or a coworker from emptying your account. On the positive side, since you're probably only putting $10 at a time into your ewallet, there's a lot less potential for harm than leaving your credit card sitting around. And because the ewallet is managed on the Net, you could access it from multiple computers.

Second, there's the question of revisiting a page. It just doesn't seem fair to charge someone for hitting the back button or paying again if a page refreshes itself. That's a valid concern. I'm thinking either the publisher or the agent handling the wallet will need to set guidelines - unless otherwise noted, you can reload this page within 15 minutes, an hour, or six hours of your visit with no additional charge.

Third, there's the privacy question. The micropay agent can know a lot about your surfing habits. An unscrupulous agent could sell that information or even use it for personal gain, and we don't want that to happen. That's one reason I don't want Microsoft owning micropay.

Fourth, there's the question of management. I foresee a system that would give you a lot of control. You will decide whether or not to micropay for content on a site-by-site basis. You can say Site A is always authorized, but ask on each page with Site B, and remind me in a week to think through how I want to handle Site C.

We haven't even touched the idea of tip jars, where you read an article and then decide to tip the publisher and author, but that's definitely a concept that cries out for micropayments. "Like this piece? Click here to donate 5¢."

Using Micropay

There are a lot of ways to use micropay: buying MP3s, accessing archives, ordering postage stamps, and automatically paying for Web content as you surf are ones we've already discussed.

But there are other ways micropayments (online transactions of under $10) can be used. For instance, you might be willing to pay $1/month for unlimited ad-free access to My Yahoo. Using credit cards, Yahoo couldn't make money on such a small transaction. They'd have to bill you for at least six months and possibly a year to make it worthwhile. But with micropay, that $1 transaction might only cost them 15-20¢.

For those who don't like the penny-a-page model for surfing the Web, micropay might let them pay a buck or two each month to support their favorite site and access it ad-free. Without a micropay system, the cost of transactions would either spike the monthly rate or mean you'd need to pay for 3 or 6 months at a time.

The key benefit of micropay is making small transactions possible at minimal cost. That's why I'm convinced it someone will eventually make it work.

The Mac Web

We're not alone in looking at different models to remain profitable on the Web - or in our concern for retaining a free version. Here's where that might lead.

We'll probably begin by offering two versions of the site. Regular visitors will see the same content they're used to, but supporters will see ad-free content.

Supporters may have several options for access to ad-free content. Although micropay isn't viable yet, we might team up with several other Mac-related sites to offer a micropay system that covers more than Low End Mac. You'd buy 1,000 credits for $10 and be able to log into member sites to view ad-free content. When you use up your credits, you can buy more.

As an alternative, you might subscribe to Low End Mac at $5 for 90 days of ad-free access.

Some sites might also offer extras to micropay users and subscribers - a free mailbox, 5 MB of Web space, special deals on site merchandise (get your red hot Low End Mac sweatshirt!), etc.


The Web began as a way to freely share information. Over the past several years, it has also developed a commercial aspect. There are businesses that exist only because of the Web, such as, eBay, PayPal,, and Cobweb Publishing (publisher of Low End Mac).

Thanks to the dot-coms and their ads, there is a lot of free content on the Web. But with the failure of several heavily financed dot-coms, ad rates have plummeted. The future of free Web content is in jeopardy.

In addition to facilitating buying MP3s online at reasonable prices, micropay will make it possible for Web publishers to create new models for viewer support that simply aren't practical with the older credit card technology.

Early steps such as PayPal and the Amazon Honor System have made some sub-$10 transaction feasible, but they become too costly as we approach the dollar mark. (Just as credit cards become too costly at around $10 per transaction.)

There is great potential benefit to consumers, publishers, online businesses, and those who create a viable micropay system. It's just a matter of time.

Coming Monday: Reader Feedback on Micropayments

The Micropayment Series

  1. A Penny for Your Thoughts, an introduction to micropayments
  2. Little Payments, Big Business, the scope of micropayments
  3. Paying For Web Content, why you'll like micropayments
  4. The Ad-Based Web Is Dying, how micropayments can change the face of the Web
  5. Conclusion: Making Micropay Work
  6. Reader Feedback

Further Reading