Online payment transaction fee’s have always been a big problem for small e-commerce start-ups. When it costs 2-5% as well as a largish per transaction fee, it’s something akin to walking a tightrope trying to maintain profitability, and when you sell cheap items, it gets even worse. Consider that a song online goes for around 99cents, and then wonder how you could sell them using your existing online payment charges.
Payment services like Paypal have proven that money isn’t really money until it’s withdrawn from their service, (thereby avoiding huge unnecessary fee’s), and look at how popular that has turned out. Right now, online payment services like Paypal are starting to make the direct credit card services look extremely bloated (charge wise) by comparison.
Now enter micro-payments, in order to make the sale of online video and music sales a plausible online venture, the ability to take a vast number of small charges individually is essential. A host of new and existing companies are looking into providing this service as well, because there is huge money in it (albeit in very small pieces).
The more competition in the marketplace, the more competitive the pricing gets to webmasters, and I’d imagine that the same companies handling micro-payments, will also offer normal payment services as well, which will hopefully drive down the current prohibitive costs to the small webmasters out there.
News.com have written a rather nice piece about micro-payments and you can find the article here.
Regards
Franki
