

Ask HN: Anybody here got use for micropayments? - ulf

I am currently founding a startup which deals with acquiring micropayments as low as a single cent. Before launching publicly we are interested in cooperating with a small number of enterprises to establish and maybe customize the process. What we are going to offer is an easy system that lets you sell any kind of stuff to your customers, for prices as low as 1 cent, without having the hassle to maintain account information and so on by yourself. If you would like to integrate such payments easily into your platform or product, feel free to contact me (email in the profile) so we can try to work something out.<p>Disclaimer: We are based in Germany, so while it should not be a problem for anyone in the EU to use our service, we cannot at this moment provide anything for anyone outside Europe.
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jdietrich
No. It's a solution in search of a problem. There are plenty of businesses
that would like to receive micropayments, but time after time customers have
rejected them. Even if you somehow created a system that was absolutely
seamless and required zero effort on the part of the user, you'd still have to
convince people that they actually want to make micropayments.

The trouble is that if you set a price that is _very nearly free_ then you are
inevitably competing with _actually really free_. Dan Ariely's research has
shown that customers massively overvalue anything free. Customers
overwhelmingly prefer a free good to a good at any price, even when there is a
significant difference in quality. No experimenter thus far has managed to
break this natural gravity towards free in preference to any price. Add in the
inevitable friction of the act of payment and you've got an overwhelming
barrier to entry that without fail drives the mass of the market towards free
alternatives.

There have been a litany of failed micropayment services, all of whom failed
for the same reason - rather than doing the Agile thing and finding out what
the customer wanted, they tried to impose a 'great idea' on a market that has
consistently rejected it. Why exactly are you going to succeed where dozens
have failed? What are you going to do differently?

<http://www.predictablyirrational.com/pdfs/zerofree.pdf>
<http://www.shirky.com/writings/fame_vs_fortune.html>

~~~
ulf
I can see your concerns, most of which are of course valid. A lot of people
failed doing this kind of thing, though there were a lot of failures during a
time when the internet clearly was not ready for that kind of thing in
general. Nowadays, thanks to people like Rupert Murdoch the thought of paying
for something gets at least a little attention (I do not think that news
content is suitable for this approach).

The companies we will focus on are providers of _exclusive_ content or
services, many of which already sell their stuff using the freemium model. I
am not saying that all of these will embrace micropayment, but I am saying
that there are a lot of people worried about improving their conversion rate.
If the lowest option you offer a customer for buying stuff is a 20$ monthly
membership, of course you lose a lot of them. Being able to easily acquire
small payments, whole models could chance.

As to your second concern, the whole point of this post is being agile, to get
customer feedback before everything is set in stone. We do not want to impose
our great idea, currently we have a basic understanding of how a simple and
flexible solution could look like, and would like to validate our approach
with the help of some cooperators.

------
spokey
I happen to be working on a micropayment strategy and implementation for my
day job (we're content producers in this scenario) but we're US based.

I am curious to know more about the micropayment problem your startup is
solving.

The technical issues--transactional processing, account management,
integration with the web experience, etc.--aren't trivial but they are
relatively straightforward.

The harder nut to crack seems to be the social issue: Customers don't want to
break out a credit card for a $0.01 purchase, so you need some sort of digital
wallet or debit account to deduct from. Yet there is no "digital wallet"
service with broad enough acceptance to assume that your (or at least my)
average customer will have one.

The chicken-and-egg problem seems to be a challenge: Sellers won't offer the
digital wallet payment option if there aren't existing customers. Customers
won't sign up for a digital wallet if there aren't sellers who use it.

Are you doing anything to address this side of the problem?

~~~
ulf
You raise some very valid points, most of which we also identified as key
questions to our enterprise. As to the social issue: we anticipate the
chicken-egg problem on an even broader scale. Our target group are not
companies who already do sell a lot online, but the ones who did not even
start doing so, missing a suitable solution to acquire payments. So we focus
on projects where the direct selling of goods or services starts from the
ground, which we expect to work to our advantage, in regard to convincing
companies of using our service, even without an exisiting customer base.

We will not pursue the customers directly at first, and concentrate on finding
partners for integration. These will be probably startups themselves, willing
to try unorthodox methods to get ahead.

In regard to the digital wallet, our strategy is to aggregate the most
important existing payment services to allow charging of accounts. With
suitable integration, this de facto pre-paid approach can be turned into a
nearly-instant experience for the customer.

